GBP/USD erased earlier losses after BoE policy decision

British pound received support, neutralizing earlier losses against the US dollar, after Bank of England (BoE) left base interest rate and monetary stimulus unchanged at its meeting today.

GBP/USD reached a session high at 1.5237 at 11:11 GMT. Support was expected at July 17th low, 1.5079, while resistance was likely to be found at July 31st high, 1.5254.

Minutes ago it became clear that Bank of England left its base interest rate unchanged at 0.50% and kept the size of monetary stimulus at 375 billion GBP at Mark Carneys first meeting as Governor.

“It is getting increasingly hard not to judge that the U.K. growth outlook is at an inflexion point, or even perhaps at ‘escape velocity’ as Mark Carney describes it,” David Tinsley, an economist at BNP Paribas SA in London, said before the decision, cited by Bloomberg. “Increasingly the talk is going to be of policy’s role in sustaining the recovery rather than in trying to get growth moving.”

BoEs decision came after earlier on Thursday Markit and the Chartered Institute of Purchasing and Supply (CIPS) reported that in July manufacturing activity in the United Kingdom expanded at the fastest pace since March 2011, easing down concerns over the economic growth prospects. Manufacturing PMI rose to 54.6 in July after 52.9 in June, which was a revision up from 52.5 previously. Experts had projected that the index will reach 52.8. This data may prove favorable to economic growth, prices and employment, as manufacturing output and new orders advanced at the largest rate since February 2011.

Meanwhile, the US dollar was supported after yesterday the Federal Reserve Bank decided to keep its asset purchases at the scale of 85 billion USD per month, as economic growth in the United States was going at a “modest” pace.

Investors were expecting the non-farm payrolls report from the US, scheduled on Friday, after the positive ADP Employment Change, reported yesterday. It showed that the private sector in the United States added 200 000 new job positions in the month of July, surpassing preliminary estimates of 180 000 jobs.

Elsewhere, the sterling was trading higher against the euro, as EUR/GBP pair fell by 0.67% to 0.8690 at 11:40 GMT.