The pound remained near one-month highs against the U.S. dollar on Wednesday, as demand for sterling remained supported by data showing that the U.K. trade deficit narrowed more-than-expected in February.
GBP/USD hit 1.6765 during U.S. morning trade, the pair's highest since March 7; the pair subsequently consolidated at 1.6751, inching up 0.02%.
Cable was likely to find support at 1.6658, the low of March 5 and resistance at 1.6786, the high of March 7.
The pound remained supported after the Office of National Statistics reported that the U.K. trade deficit narrowed to £9.09 billion from a downwardly revised deficit of £9.46 billion in January.
Analysts had expected the trade deficit to shrink to £9.20 billion.
Exports in February fell by 1.6% to £23.547 billion, lowest since November 2010, the ONS said, while imports were down 2.2% to £32.641 billion, the lowest since April 2011.
The data came one day after the International Monetary Fund upgraded the U.K. growth forecast for this year, but said that U.K. exports had been disappointing. The fund said it now expected the U.K. economy to expand by 2.9% in 2014, up from a previous forecast of 2.5% in January.
The pound also strengthened after upbeat U.K. industrial production data on Tuesday boosted the outlook for the wider recovery and fuelled expectations that the Bank of England may raise interest rates sooner.
Meanwhile, the dollar remained under pressure ahead of the minutes of the Federal Reserve’s March meeting due out later in the trading day, after last week’s U.S. payrolls report came in slightly below expectations.
Fed Chair Janet Yellen said recently that slack in labor markets showed accommodative policies will still be needed for some time.
Sterling was little changed against the euro, with EUR/GBP adding 0.07% to 0.8242.