Investing.com - The pound remained edged down against the U.S. dollar on Wednesday, but still remained within close distance of five-year highs as growing expectations for a U.K. interest rate hike next year continued to support demand for sterling.
GBP/USD hit 1.6956 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.6962, easing 0.09%.
Cable was likely to find support at 1.6925 and resistance at 1.7000.
A recent string of upbeat reports about the U.K. economy has raised expectations the BoE could raise borrowing costs ahead of other central banks.
The pound strengthened across the board on Tuesday after a forecast beating U.K. services purchasing managers’ index bolstered the outlook for the wider recovery.
The U.K. services PMI rose to 58.7 last month from 57.6 in March, far above the 50 level separating growth from contraction and beating forecasts of an unchanged reading.
The report came after data last week showed that manufacturing activity in the U.K. expanded at the fastest rate in five months in April, pointing to solid growth at the start of the second quarter.
The U.K. economy expanded 0.8% in the first three months of the year, picking up after an expansion of 0.7% in the fourth quarter of 2013, and grew 3.1% on a year-over-year basis.
The BoE was to conclude its two-day policy meeting on Thursday. 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.
Meanwhile, in testimony to Congress, Federal Reserve Chair Janet Yellen did little to change views of the timing of rate hikes.
Ms. Yellen said the labor market continues to improve, but remains at less-than-ideal levels.
Sterling was little changed against the euro, with EUR/GBP edging up 0.06% to 0.8209.
Also Wednesday, concerns over the crisis in Ukraine persisted as conflict between the government and pro-Russian separatists in the east and south of the country continued to escalate, fuelling fears over a civil war.
Sentiment found some support however, after Russian President Vladimir Putin said he was ready to discuss a way out of the Ukrainian crisis with the head of the Organization for Security and Co-operation in Europe.
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