GBP/USD slightly higher ahead of Bank of England minutes

British pound traded slightly higher and headed for a second consecutive weekly gain against the US dollar on Friday before Bank of England publishes the minutes of its most recent meeting on policy next week.

GBP/USD reached a session high at 1.6091 at 8:00 GMT, after which consolidation followed at 1.6080, rising 0.09% for the day. Support was likely to be received at November 7th low, 1.6010, while resistance was to be encountered at November 14th high, 1.6101, the highest point since November 8th.

In its quarterly Inflation Report released on November 13th, Bank of England said that the rate of unemployment is more likely than not to decrease to the targeted 7% threshold, which will prompt the bank to consider a raise in the benchmark interest rate during the third quarter of 2015. Policymakers had previously projected that such a scenario would occur during the second quarter of 2016. The unemployment rate in the country, according to data published by the International Labour Organization (ILO), dropped to 7.6% during the three months through September this year, compared to the same period in 2012, which marked the lowest level since the three months through August 2009.

“The U.K. Quarterly Inflation Report essentially confirmed that the Bank of England now expects unemployment to fall faster as the economic recovery continues,” Neil Staines, London-based head of trading at ECU Group Plc, wrote in a note to clients, cited by Bloomberg News. “In an environment of low inflation, rising growth and rising employment, U.K. assets should remain attractive.”

The Bank of England is scheduled to release the minutes of its most recent policy meeting on November 20th. At the meeting on November 7th, the bank decided to maintain the benchmark interest rate at the current record low level of 0.50% and the size of monthly monetary stimulus at 375 billion GBP.

Meanwhile, yesterday the Office for National Statistics (ONS) reported that retail sales in the United Kingdom declined 0.7% in October compared to September, after a month ago sales climbed 0.6%. Preliminary estimates pointed that the indicator will show no change.

The yield on UK benchmark 10-year gilts dropped to 2.76% today, after having advanced to 2.85% on Wednesday, or the most since October 16th. UK gilts have lost 3% during this year through yesterday.

Elsewhere, the sterling was steady against the euro, with EUR/GBP cross dipping 0.02% on a daily basis to trade at 0.8377 at 12:36 GMT. It became clear that the harmonized consumer price index in the European Union (EU) slowed down to a four-year low in October. According to data by Eurostat, the CPI in the region climbed 0.9% during the 12 months through October, but slowing down in comparison with the rate, registered during the 12 months through September, which was 1.3%. What is more, this result appears to be the weakest since October 2009. This data boosted concerns that the EU might probably head towards a continuous period of deflation. In the Euro zone, the final annualized rate of consumer inflation was 0.7% in October, or the least since November 2009, which confirmed the preliminary rate, announced by Eurostat on October 31st.

GBP/JPY pair was gaining 0.34% to trade at 161.26 at 12:39 GMT. The pound has appreciated 5.6% during the past six months, or the best performing currency among the 10 developed-nation currencies, which are tracked by Bloomberg Correlation-Weighted Indexes. The euro has climbed 4.2%, while the US dollar has slid 0.6% during the same period.