GBP/USD advanced to session highs after BoE maintained policy course

Having lost ground against the US dollar earlier on Thursday, the sterling managed to recover and climb to the highest point for todays trade, after Bank of England (BoE) decided to leave its monetary policy unchanged.

GBP/USD hit a session high at 1.5661 at 11:19 GMT, after which consolidation followed at 1.5646, gaining 0.12% for the day. Support for the pair was likely to be found at September 3rd low, 1.5522, while resistance was to be encountered at August 20th high and also the highest in two months, 1.5696.

Bank of England left its benchmark interest rate at 0.50% and monetary stimulus at 375 billion GBP at its meeting today amid signs of recovery, gaining momentum. This again fueled concerns that policymakers may stray from the pledge of maintaining interest rates, which directly influence borrowing costs, at low levels until 2016. Bank of Englands Monetary Policy Committee did not make an official statement to support its actions, as happens usually, when no changes in monetary policy occurred. Some experts supposed that the Committee will make a statement in which to confirm that the bank would not consider an interest rate raise in 2015, easing investors concerns. The policy decision was made, following the positive series of data out of the United Kingdom recently and after the OECD said on Tuesday that it expected UKs economic growth would surpass the growth, registered in the United States, Germany, France and Japan in the second half of 2013.

Yesterday, Markit research group in cooperation with the Chartered Institute of Purchasing and Supply (CIPS) reported that activity in the sector of services in the United Kingdom rose at the fastest pace in 6.5 years in August. Services PMI reached a value of 60.5 from 60.2, recorded a month ago, exceeding preliminary estimates of a reading of 59.7. It was reported also that new business grew for the eighth consecutive month and the latest increase was the most formidable one in more than 16 years.

In the mean time, the greenback was receiving support after the upbeat ISM manufacturing activity report on Tuesday, which reinforced the view of a possible pare back of Federal Reserve’s stimulus program at its policy meeting this month.

Market players remained wary after the US Senates Foreign Relations Committee approved a resolution on authorizing limited military strikes on Syria. The full Senate is expected to vote on military intervention on September 9th.

Elsewhere, the pound was gaining against the euro, with EUR/GBP cross down by 0.28% for the day to trade at 0.8430 at 12:36 GMT. GBP/JPY pair was advancing 0.26% to trade at 156.30 at 12:37 GMT.