Forexpros - The pound held gains against the U.S. dollar on Wednesday, after Germany’s constitutional court approved the country’s participation in the euro zone’s bailout fund, while investors turned to the Federal Reserve’s two-day policy meeting.
GBP/USD hit 1.6131 during U.S. morning trade, the pair’s highest since May 11; the pair subsequently consolidated at 1.6095, adding 0.15%.
Cable was likely to find support at 1.5988, the low of May 15 and resistance at 1.6181, the high of May 10.
The ruling cleared the way for Germany’s president to ratify the European Stability Mechanism under certain conditions, allowing the European Central Bank’s bond purchasing program to proceed.
The German court said that the country’s liability to the EMS must not exceed EUR190 billion without the approval of the lower house of parliament and said that both houses of parliament must be kept informed about decisions relating to the ESM.
Meanwhile, markets eyed the outcome of the Fed’s policy meeting on Thursday, amid speculation that the U.S. central bank may implement a third round of quantitative easing, sending the greenback broadly lower.
The U.S. dollar also remained under pressure after Moody’s ratings agency said on Tuesday that it could downgrade the U.S’s triple-A rating if budget negotiations for 2013 do not result in policy measures which will reduce the country’s debt.
In the U.K., official data showed earlier that the U.K. claimant count fell by a seasonally adjusted 15,000 in August, defying expectations for an increase of 500 people.
The previous month’s figure was revised a decline of 13,600 from a previously reported drop of 5,900.
The unemployment rate in the U.K. rose unexpectedly to 8.1% from 8.0%. Analysts had expected the jobless rate to hold steady at 8.0%.
Elsewhere, the pound was lower against the euro with EUR/GBP adding 0.14%, to hit 0.8011.
Also Wednesday, German Chancellor Angela Merkel welcomed the court ruling on the ESM, calling it a good day for Germany and for Europe.
