Investing.com - The pound rose to 29-month highs against the dollar on Thursday after a sharper than expected fall in the U.K. unemployment rate fuelled expectations that the Bank of England could raise interest rates sooner than previously thought.
GBP/USD hit 1.6617, the highest since August 2011 and was last up 0.18% to 1.6603.
Cable is likely to find support at 1.6449, Wednesday’s low and resistance at 1.6725.
Demand for sterling continued to be underpinned 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.
The pound shrugged off private sector data on Thursday showing that retail sales growth slowed this month.
The Confederation of British Industry said its index of U.K. retailers fell to 14.0 this month from 34.0 in December. Analysts had expected the index to decline to 25.0 in January.
Elsewhere, the euro was higher against the pound, with EUR/GBP advancing 0.54% to 0.8217, up from the one-year lows of 0.8167 struck on Wednesday.
The common currency was boosted after stronger-than-expected data on euro zone private sector activity indicated that the recovery in the euro area is strengthening.
Markit said the euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, as growth picked up in Germany and the rate of decline eased in France.