Forex Pros – The pound extended losses against the U.S. dollar on Tuesday, falling to a fresh five month low after Bank of England Governor Mervyn King said he was making contingency plans for a Greek sovereign debt default.
GBP/USD hit 1.5913 during European early afternoon trade, the pair’s lowest since January 31; the pair subsequently consolidated at 1.5953, shedding 0.21%.
Cable was likely to find support at 1.5819, the low of January 31 and resistance at 1.6011, Monday’s high.
Speaking before Parliament’s Treasury Committee, King’s remarks echoed worries he expressed on Friday, when he warned that Greece’s problem was solvency, not liquidity, and that temporary cash injections would not fix it.
“What we’re doing is to say there is sufficient concern in the market about the possibility of (a Greek) default for us to think about contingency plans and the consequences of this event,” he said.
Greece’s parliament was due to vote on a EUR28.4 billion, five-year austerity package on Wednesday. If the package is not approved, the European Union and International Monetary Fund have said they will not disburse the fifth tranche of Greece’s EUR110 billion bailout program.
The pound was also lower against the euro, with EUR/GBP easing up 0.08% to hit 0.8942.
Later in the day, the U.S. was to publish industry data on house price inflation, as well as a report on consumer confidence.
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