Forexpros – The pound fell to a seven-and-a-half month low against the U.S. dollar on Tuesday, as fears over the debt crisis in the euro zone intensified, boosting demand for the safe haven dollar.
GBP/USD hit 1.5763 during early European trade, the pair’s lowest since January 25; the pair subsequently consolidated at 1.5773, shedding 0.56%.
Cable was likely to find support at 1.5582, the low of January 12 and resistance at 1.5885, Monday’s high.
Earlier in the day, a report in the Financial Times said Italy’s Finance Ministry held talks with Chinese officials about “significant” purchases of Italian bonds. Despite the report, Italian bond yields edged higher ahead of an auction of EUR7 billion of government bonds later in the day.
Meanwhile, fears over a potential Greek default and expectations for a ratings cut on France’s three largest banks, due to their exposure to Greek holdings, also weighed.
The outlook for the pound also remained gloomy as a recent string of soft economic data underlined concerns over fragile U.K. growth and fuelled speculation that the Bank of England may resort to more stimulus to shore up growth.
Elsewhere, the pound was higher against the euro, with EUR/GBP shedding 0.25% to hit 0.8601.
Later in the day, the U.K. was to publish official data on consumer price inflation, while the U.S. was to release official data on import prices, as well as a report on the federal budget balance.
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