Investing.com - The pound rose to two-week highs against the dollar on Wednesday after the Bank of England outlined a new forward guidance policy and upgraded its forecast for economic growth this year.
GBP/USD hit 1.6559, the highest since January 30 and was last up 0.56% to 1.6542.
Cable was likely to find support at 1.6400 and resistance at 1.6605, the high of January 29.
Sterling was boosted after the Bank of England indicated that it will keep interest rates on hold at record lows of 0.5% for at least another year, despite upgrading the U.K. economic growth forecast for 2014 to 3.4% from 2.8%.
BoE Governor Mark Carney said the U.K. unemployment rate has fallen much faster than the bank anticipated, and will hit the initial 7% threshold “in the spring”. In the six months since forward guidance was implemented the U.K. unemployment rate has fallen to 7.1% from 7.8%.
"Despite the sharp fall in unemployment, there remains scope to absorb spare capacity further before raising the Bank Rate," the bank said.
The bank outlined new forward guidance, saying that it will not raise rates until the spare capacity in the U.K. economy has been fully absorbed, which it does not see happening until 2015.
The bank said it would consider a broad range of indicators, including the unemployment rate and business surveys, and added that when rates rise they will do so only gradually.
The pound rose to seven-day highs against the euro, with EUR/GBP down 0.54% to 0.8243.