Sterling inched up this afternoon after the Bank of England (BoE) announced that policymakers have kept interest rates on hold at a record low 0.5% and left its asset purchase targets unchanged, as expected.
The policy decision pushed the focus on to next week's BoE inflation report, which could reveal the extent of weak economic fundamentals in the UK, leading to speculation that the central bank might increase their asset purchase targets in December. Further supporting the British pound this afternoon was US economic data which showed a positive start for the labour market in the fourth quarter. Data showed that the number of Americans claiming unemployment benefits fell to the lowest level in seven months.
Jobless claims fell by 10,000 to 390,000 in the week ending 5 November, compared to expectations of 400,000, while the number of people on unemployment benefit rolls decreased, and those getting extended payments rose. With data pointing to an improvement in the labour market and ECB president Mario Draghi deploying extra firepower at his disposal (buying Italian bonds) to help stem the eurozone crisis, the safe-haven US dollar weakened, pushing the GBP/USD trading pair 0.21% higher this afternoon.