Investing.com

Investing.com - The pound was trading close to its highest level in almost five years against the dollar on Wednesday, amid heightened expectations for a U.K. interest rate hike in the early part of next year.



GBP/USD was trading at 1.6970, not far from the peaks of 1.6993 reached on Tuesday, the highest level since August 2009.



Cable was likely to find support at 1.6925 and resistance at 1.7000.



A recent string of upbeat reports about the U.K. economy has raised expectations the BoE could raise borrowing costs ahead of other central banks.



The pound strengthened across the board on Tuesday after a forecast beating U.K. services purchasing managers’ index bolstered the outlook for the wider recovery.



The U.K. services PMI rose to 58.7 last month from 57.6 in March, far above the 50 level separating growth from contraction and beating forecasts of an unchanged reading.



The report came after data last week showed that manufacturing activity in the U.K. expanded at the fastest rate in five months in April, pointing to solid growth at the start of the second quarter.



The U.K. economy expanded 0.8% in the first three months of the year, picking up after an expansion of 0.7% in the fourth quarter of 2013, and grew 3.1% on a year-over-year basis.



The BoE was to conclude its two-day policy meeting on Thursday. Early last week BoE Governor Mark Carney said the U.K. recovery is starting to broaden, but added that the bank still sees plenty of slack in the labor market.



Elsewhere, sterling was trading close to two-month lows against the euro, with EUR/GBP at 0.8206, after falling as low as 0.8192 earlier.





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