Investing.com - The euro pushed higher against the pound on Wednesday as the release of more dovish than expected Bank of England minutes tempered expectations for a U.K. rate hike.
EUR/GBP was up 0.23% to 0.8004, recovering from the one-and-a-half year low of 0.7958 struck on Monday.
The pair was likely to find support at 0.7958 and resistance at 0.8020.
Sterling slid lower after Wednesday’s minutes of the BoE’s June meeting showed that monetary policy committee members voted unanimously to leave interest rates on hold at their record low of 0.5% this month.
Some MPC members believe the question of whether enough spare capacity has been absorbed has become "more balanced" since last month.
However, the committee was split over how much slack remains in the U.K. labor market, while weak growth in earnings and inflation continued to be a concern.
The minutes also showed that the bank was "somewhat surprised" that the financial markets were pricing in a low probability of interest rates rising this year.
Sterling strengthened broadly in recent sessions after BoE Governor Mark Carney said late last week that rates could rise sooner than investors expect. The remarks prompted investors to bring forward expectations for a rate hike to the end of this year from the first quarter of 2015.
In contrast, the European Central Bank cut interest rates to record lows earlier this month, in a bid to ward of the threat of deflation and spur growth in the euro zone.
The pound was also slightly lower against the dollar, with GBP/USD slipping 0.09% to 1.6946, off the five year peak of 1.7011 set on Monday.
Investors were looking ahead to the outcome of the Federal Reserve’s latest policy meeting later Wednesday after upbeat U.S. inflation data boosted expectations for a more hawkish stance on monetary policy from the central bank.
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