Forexpros – The pound clung to small gains against the U.S. dollar on Thursday, hovering just above a seven-week low but concerns over the euro zone debt crisis continued to weigh after ratings agency Fitch downgraded Portugal to junk status.
GBP/USD hit 1.5567 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.5542, rising 0.11%.
Cable was likely to find short-term support at 1.5494, Wednesday’s low and a seven-week low and resistance at 1.5655, Wednesday’s high.
Fitch cut Portugal’s rating to BB+ from BBB-, saying it expects gross domestic product to contract by 3% in 2012, making the government’s deficit reduction plan far more challenging to execute.
The pound edged higher earlier as market sentiment was boosted after a report showed that German business confidence improved unexpectedly in November, indicating that the euro zone’s largest economy is coping with the region’s debt crisis better than experts had feared.
The data came a day after the least successful German bond sale since the launch of the single currency sparked concerns over sovereign debt contagion to core euro zone economies.
Later Thursday, German, French and Italian leaders were to meet to discuss ways to deal with the euro zone’s worsening financial troubles.
In the U.K., revised data showed that gross domestic product expanded by 0.5% in the third quarter and was up 0.5% on the year, in line with initial estimates earlier this month and with economists’ forecasts.
The pound was slightly lower against the euro, with EUR/GBP easing up 0.11% to hit 0.8603.
Meanwhile, markets in the U.S. were to remain closed on Thursday for Thanksgiving.
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