The pound edged higher against the dollar on Wednesday, but gains were limited as investors remained cautious ahead of the minutes from the Federal Reserve’s latest meeting and the upcoming U.S. nonfarm payrolls report.

GBP/USD rose to highs of 1.6429 and was last up 0.15% to 1.6425.

Cable was likely to find support at 1.6372, Tuesday’s low and near-term resistance at 1.6473, the high of January 3.

Demand for the dollar continued to be underpinned after data released on Tuesday showed that the U.S. trade deficit shrank to the lowest level in four years in November as exports rose to a record high.

Investors were turning their attention to the minutes of the Fed’s December meeting, due for release later Wednesday, for indications on the possible timing of further reductions in the bank’s stimulus program.

Investors were also awaiting Friday’s U.S. nonfarm report for December for indications of the strength of the recovery in the labor market.

In the U.K., data on Wednesday showed that house prices fell for the first time in 11 months in December.

Mortgage lender Halifax said house prices fell by 0.6% last month, compared to expectations for a 0.6% increase. However, prices were still up by 1.9% in the last three months 2013, compared to the third quarter.

Sterling was higher against the euro, with EUR/GBP down 0.20% to 0.8284.

The single currency remained under pressure after data on Tuesday showed that the annual rate of inflation in the euro zone slowed to 0.8% in December from 0.9% the previous month.

The soft data fuelled fresh concerns over the threat of deflation in the currency bloc ahead of the European Central Bank’s first policy meeting of the year on Thursday.

Please LIKE our Facebook page - it makes us stronger