Forex - Pound steady after BoE keeps policy unchanged

The pound was little changed close to recent almost five-year highs against the dollar on Thursday after the Bank of England kept monetary policy on hold at the conclusion of its two-day meeting, in a widely anticipated decision.

Cable was likely to find support at 1.6925 and resistance at 1.7000.GBP/USD was trading at 1.6965, not far from the peaks of 1.6993 reached on Tuesday, the strongest level since August 2009.

The BoE’s Monetary Policy Committee voted to keep interest rates on hold at their current record low of 0.5%. The bank also made no change in its quantitative easing program, which remains at £375 billion.

The BoE will publish the minutes of this month’s meeting on Wednesday, May 21.

Expectations for a U.K. rate hike in the early part of next year have propelled sterling to multi-year highs against the dollar, after a recent string of strong economic reports indicated that the recovery is deepening.

Early last week BoE Governor Mark Carney said the U.K. recovery is starting to broaden, but added that the bank still sees plenty of slack in the labor market.

Data released on Thursday showed that U.K. house prices fell in April from a month earlier, easing concerns that the property market is overheating.

British house prices fell 0.2% last month, mortgage lender Halifax reported, and rose 8.5% in the three months to April, compared to the same period a year earlier, slowing from an increase of 8.5% in the three months to March.

Elsewhere, the pound was slightly lower against the euro, with EUR/GBPup 0.17% to 0.8218, after falling to a two-month trough of 0.8192 in the previous session.

Demand for the single currency continued to be underpinned as expectations for fresh easing measures from the European Central Bank waned ahead of the banks policy announcement later Thursday.

The ECB was widely expected to leave monetary policy on hold after recent data showed that the annual rate of inflation in the euro zone ticked up to 0.7% in April from a record low 0.5% in March.

The ECB targets inflation of close to but just below 2%.

The uptick in consumer prices eased pressure on the bank to take fresh steps to tackle low inflation in the region.