Forexpros – The pound steadied against the U.S. dollar on Monday, after pulling back from a one-week high amid ongoing concerns over sovereign debt contagion in the euro zone, while the greenback came under pressure following an S&P downgrade of the U.S. debt rating.
GBP/USD pulled back from 1.6475, the pair’s highest since August 1, to hit 1.6404 during European afternoon trade, still up 0.05% on the day.
Cable was likely to find support at 1.6227, last Friday’s low and short-term resistance at 1.6495, the high of June 1.
The euro was higher earlier after the ECB said in a statement late Sunday that it “will actively implement” its bond-buying program, indicating that it will likely buy Spanish and Italian government bonds.
However, the news failed to ease fears over the risk that the euro zone’s debt crisis could spill over to the region’s third and fourth largest economies.
U.K. Chancellor of the Exchequer George Osborne said in an interview with the Daily Telegraph that euro zone nations “must act swiftly” and “do whatever is necessary to ensure financial stability” in the region.
He added that the U.K. government’s austerity plan showed that it was possible to “earn credibility and get ahead of the markets through decisive action.”
Meanwhile, concerns over the U.S. economic outlook were exacerbated after ratings agency Standard and Poor’s downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed Friday.
The ratings agency kept the U.S. rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
Elsewhere, the pound was also higher against the euro, with EUR/GBP shedding 0.26% to hit 0.8689.
Leaders from the Group of Seven leading economies said Sunday that they were ready to take every action necessary to stabilize financial markets.
“We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth,” the G-7 said in a statement.
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