Investing.com - The pound remained near five-year highs against the U.S. dollar on Monday, as demand for sterling was boosted after Bank of England Governor Mark Carney warned last week that U.K. interest rates could rise sooner than expected.
GBP/USD hit 1.7011 during U.S. morning trade, the pair''s highest since August 6, 2009; the pair subsequently consolidated at 1.6986, adding 0.11%.
Cable was likely to find support at 1.6950 and resistance at 1.7050.
The pound strengthened broadly after Mark Carney said last Thursday that rapid economic growth and the steep decline in the jobless rate mean that the time to begin raising interest rates is growing closer.
Official data on Wednesday showed that the U.K. unemployment rate fell to a five-year low of 6.6% in the three months to April.
Carney said the bank will monitor the labor market closely to determine the right moment to start raising rates and reiterated that when rates do start to rise they will do so only gradually.
Some market watchers already expect the central bank to start raising rates from their record low 0.5% late this year.
Investors remained cautious however, as concerns over the ongoing Sunni insurgency in Iraq continued to weigh on market sentiment, fuelling fears over the impact of reduced oil supply on global growth.
In the U.S., the Federal Reserve Bank of New York said that its general business conditions index increased to 19.28 this month from a reading of 19.01 in May. Analysts had expected the index to decline to 15.0.
A separate report showed that U.S. industrial production rose by a seasonally adjusted 0.6% last month, above forecasts for a 0.5% gain.
Meanwhile, the International Monetary Fund cut its forecast for U.S. economic growth this year, saying that the unusually harsh winter, along with the “still-struggling housing market” would act as a drag on growth.
The IMF said it now expects the U.S. economy to expand 2% this year, down from its forecast of 2.8% in April.
Sterling was little changed against the euro, with EUR/GBP up 0.05% to 0.7986.
Also Monday, Eurostat said consumer price inflation rose 0.5% last month, in line with expectations and unchanged from a preliminary estimate. Euro zone inflation rose by 0.7% in April.
The rate remains firmly below the European Central Bank''s target of near but just below 2%.