Investing.com - The pound rose to 29-month highs against the dollar on Thursday after a larger than expected drop in the U.K. unemployment rate heightened expectations that the Bank of England will raise interest rates ahead of other central banks.
GBP/USD hit 1.6614, the highest since August 2011 and was last up 0.21% to 1.6609.
Cable is likely to find support at 1.6449, Wednesday’s low and resistance at 1.6725.
Sterling remained broadly stronger after data on Wednesday showed that the rate of unemployment in the U.K. fell to 7.1% in the three months to November, to stand just above the 7% level the BoE has said is its threshold for considering raising interest rates from their current record low of 0.5%.
Analysts had expected the jobless rate to fall to 7.3% from 7.4% in the three months to October.
But the minutes of the BoE’s January meeting, also published on Wednesday, stressed that the bank is in no rush to act.
"It was now likely that the unemployment rate would reach the 7% threshold materially earlier than previously expected," the minutes said, but officials "saw no immediate need to raise Bank Rate," the bank’s benchmark interest rate, "even if the 7% unemployment threshold were to be reached in the near future."
Elsewhere, the euro was higher against the pound, with EUR/GBP advancing 0.38% to 0.8204, up from the one-year lows of 0.8167 struck on Wednesday.
The common currency was boosted after data on Thursday showed that manufacturing activity in Germany expanded at the fastest pace since May 2011 this month, bolstering the outlook for the recovery in the euro zone.
The preliminary reading of German manufacturing purchasing managers’ index came in at 56.3 in January from a final reading of 54.3 in December. Analysts had expected the index to inch up to 54.6 this month.
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