Forexpros – The pound erased losses against the U.S. dollar on Tuesday, as the Swiss franc tumbled against both the dollar and the euro after the Swiss National Bank intervened in currency markets to weaken the franc.
GBP/USD rebounded from 1.6065, the daily low, to hit 1.6141 during early European trade, rising 0.14%.
Cable was likely to find support at 1.6061, Monday’s low and a six-week low and resistance at 1.6269, the high of September 1.
Earlier in the day, the SNB announced that it had set a minimum exchange rate target of 1.20 per euro for the Swiss franc, adding that it was prepared to enforce this minimum rate with the utmost determination by purchasing foreign currency in unlimited quantities.
The central bank said the massive overvaluation of the franc posed an acute threat to the Swiss economy and carried a risk of deflation.
Meanwhile, the pound was lower against the euro, with EUR/GBP rising 0.42% to hit 0.8783.
Later Tuesday, the Institute of Supply Management was to produce a report on U.S. service sector activity.
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