Sterling fell to a six-week low against the dollar and slipped against the euro on Wednesday as a mixed UK employment report and a slightly dovish tone to Bank of England policy minutes painted a cloudy picture. The minutes of the BoE's May meeting showed an unchanged 6-3 majority seeing no need for an increase in UK interest rates, but two of the hawks, Spencer Dale and Martin Weale, said their decisions were finely balanced.
The number of Britons claiming unemployment benefit unexpectedly rose in April, posting its biggest rise in more than a year, although the figure was skewed by recent changes to benefit rules, data showed on Wednesday. The wider ILO measure of unemployment continued to suggest modest improvement in the labour market.
"The minutes and the labour data have left sterling on the weaker side. Spencer Dale and Martin Weale have showed their dovish credentials," said Kathleen Brooks, research director at FOREX.com. Sterling was trading down around 0.6 percent versus the dollar at $1.6142, after falling to a six-week low of $1.6105 in afternoon trade. It had come under pressure in the run-up to the BoE minutes as traders speculated on Dale or Weale voting for no change in rates.
Traders said the break below sterling's 100-day moving average at $1.6135 was making the picture increasingly negative. The pound has traded above the 100-day moving average since January. "A close below the 100-day and the target is the series of lows in March ahead of the 200-day moving average," said a proprietary trader at a European bank.
The March low for sterling was $1.5937, while the 200-day comes in around $1.5926. The euro traded with gains of around 0.6 percent at 88.16 pence, close to its session highs of 88.24.
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