Investing.com

Investing.com - The pound trimmed gains against the U.S. dollar on Thursday, as the release of positive U.S. economic reports lent some support to the greenback, but demand for sterling remained supported by earlier comments by the Bank of England.



GBP/USD pulled away from 1.7040, the pair''s highest since June 23, to hit 1.7010 during U.S. morning trade, still up 0.17%.



Cable was likely to find support at 1.6938, the low of June 17 and resistance at 1.7061, the high of June 20.



The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 21 declined by 2,000 to 312,000 from the previous week’s revised total of 314,000.



Analysts had expected jobless claims to fall by 4,000 to 310,000 last week.



A separate report showed that U.S. personal spending rose 0.2% last month, below expectations for an increase of 0.4%. Personal spending for April was revised to a flat reading from a previously reported decline of 0.1%.



Earlier Thursday, the BoE said that from October it will cap mortgages, so that people borrowing 85% of a house''s value will not be allowed to borrow more than 4.5 times their income.



The bank also announced a new affordability test on banks, whereby borrowers will now have to show that they can repay the mortgage even if interest rates rise 3%, up from 1% previously.



BoE Governor Mark Carney said the recovery in the U.K. economy is broadening and strengthening, but the housing market is the main risk to financial stability.



The bank acknowledged that the immediate impact of the cap would be minimal as most lenders already lend within the 4.5 income limit, but Carney said the measures will have "an impact of the durability of the expansion."



Demand for sterling continued to be underpinned as the new measures did little to alter expectations that the BoE will raise interest rates ahead of other central banks.



Sterling was higher against the euro, with EUR/GBP retreating 0.51% to 0.7985.







Please LIKE our Facebook page - it makes us stronger