Investing.com - The pound rose against the dollar on Thursday after investors brushed off less-than-hawkish Bank of England language, though mixed-to-upbeat U.S. data capped the pair''s advance.
In U.S. trading on Thursday, GBP/USD was trading at 1.6799, up 0.20%, up from a session low of 1.6733 and off a high of 1.6806.
Cable was likely to find support at 1.6662, the low from April 15, and resistance at 1.6997, the high from May 6.
The Bank of England on Wednesday left its growth and inflation forecasts largely unchanged in its quarterly Inflation Report and indicated that it is still in no rush to hike interest rates.
The BoE said it now expects economic growth of 2.9% in 2015, up from 2.7% in its February report, and said the rate of growth this year would remain unchanged at 3.4%.
While markets were hoping for a more definitive weather vane, the pound bounced back on sentiments that rate hikes still remain on the horizon.
Meanwhile in the U.S., upbeat data cushioned the dollar somewhat though lingering concerns over the pace of recovery gave sterling an edge over the greenback after investors digested the data.
The Federal Reserve Bank of Philadelphia said its manufacturing index ticked down to 15.4 this month from 16.6 in April, better than expectations for a 14.0 reading.
The data came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 10 fell by 24,000 to 297,000 from the previous week’s revised total of 321,000. Analysts had expected jobless claims to fall by 1,000 to 320,000 last week.
Elsewhere, the New York Fed said its manufacturing index climbed to a two-plus-year high of 19.01 in May from a reading of 1.29 in April, far surpassing market calls for a rise to 5.00 this month.
On the other hand, U.S. industrial production dropped 0.6% last month, confounding expectations for a 0.1% rise. March''s figure was revised up to a 0.9% increase from a previously estimated 0.7% gain.
U.S consumer inflation rates came in better than expected as well, though concerns arose after investors digested the data.
The Bureau of Labor Statistics reported earlier that the U.S. consumer price index rose to 0.3% in April from 0.2% in March, in line with market expectations.
The U.S. core consumer price index, which excludes food and energy items, rose by 0.2% last month, more than the expected 0.1% uptick, after a 0.2% gain in March.
On Thursday, however, the producer price index came in much better than expected, and the consumer inflation rate''s inability to maintain the same pace as its wholesale counterpart softened the dollar somewhat.
The U.S. producer price index increased by 0.6% last month, beating forecasts for a 0.2% gain, after rising 0.5% in March.
Year-over-year, the producer price index rose 2.1% in April, beating expectations for a 1.7% increase and up from 1.4% in the preceding month.
The core producer price index advanced 0.5% last month, compared to expectations for a 0.2% increase, after rising 0.6% in March.
Core produces prices rose at an annualized rate of 1.9% in April, beating forecasts for a 1.4% gain and after climbing 1.4% in the preceding month.
The Federal Reserve views core prices as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories.
Elsewhere, sterling was up against the euro, with EUR/GBP down 0.17% at 0.8165, and down against the yen, with GBP/JPY down 0.18% at 170.54.
The single currency came under pressure after Eurostat reported the euro zone’s gross domestic product grew just 0.2% in the first quarter, missing expectations for a 0.4% growth rate. On a year-over-year basis the bloc’s economy expanded 0.9%, falling short of expectations for growth of 1.1%.
Separately, Eurostat reported that the annual rate of inflation in the euro zone came in unchanged at 0.7% in April, in line with forecasts. The inflation rate is still well below the ECB''s 2% target.
Separately, European Central Bank Vice President Vitor Constancio told the Wall Street Journal earlier that the central bank was open to more monetary easing and was determined to act swiftly if required.
On Friday, the U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.