Forexpros – The pound turned lower against the U.S. dollar on Monday, as concerns over the U.K. economic outlook weighed ahead of the Bank of England’s policy setting meeting later in the week.
GBP/USD hit 1.5694 during European morning trade, the session low; the pair subsequently consolidated at 1.5698, shedding 0.30%.
Cable was likely to find support at 1.5665, Friday’s low and resistance at 1.5766, Friday’s high and a five-week high.
The pound hit a five-week high against the greenback on Friday, boosted by expectations that the European Central Bank may implement fresh measures to contain the euro zone debt crisis at its policy meeting on Thursday.
But sentiment on sterling remained fragile after official data last week showed that the U.K. economy contracted significantly more-than-expected in the three months to June, extending the U.K. recession into a third quarter.
On Friday, ratings agency Standard and Poor’s confirmed that U.K. will retain its triple-A credit rating despite recent economic weakness, saying it expected the economy to begin to recover in the second half of 2012.
However, S&P warned that if the economy failed to grow the U.K.’s sovereign rating could be downgraded.
The BoE was not widely expected to announce any changes to monetary policy at its meeting on Thursday.
Investors were also looking ahead to the outcome of the Federal Reserve’s policy setting meeting on Wednesday, amid speculation over whether the bank will hint at further easing measures.
The pound was little changed against the euro, with EUR/GBP inching up 0.01% to 0.7822.
Later Monday, the U.K. was to release official data on net lending to individuals.
Meanwhile, U.S. Treasury Secretary Timothy Geithner was to meet with German Finance Minister Wolfgang Schaeuble and European Central Bank President Mario Draghi to discuss the European, U.S. and global economies.
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