Forexpros – The pound edged lower against the U.S. dollar on Tuesday, as ongoing concerns over the debt crisis in the euro zone weighed on demand for riskier assets.
GBP/USD hit 1.5873 during European morning trade, the pair’s lowest since November 10; the pair subsequently consolidated at 1.5887, slipping 0.14%.
The pair was likely to find support at 1.5843, the low of September 9 and resistance at 1.5972, the high of October 21.
Market sentiment was hit after a rise in Italian and Spanish bond yields underscored the challenges facing European leaders as they continue to struggle to contain the region’s debt crisis.
Yields at a EUR3 billion five-year Italian bond sale on Monday hit euro-era highs of 6.29 percent, just a day after former European Commissioner Mario Monti was named to lead the country, while the yield on 10-year Spanish government bonds rose above 6% for the first time since August.
Meanwhile, German Chancellor Angela Merkel’s ruling CDU party approved a measure that would allow countries to leave the 17-nation euro zone if they choose, but remain within the European Union.
Germany will now need to persuade EU partners to agree to changes to the bloc’s governing treaty to allow a country to leave the euro zone.
Sterling also remained vulnerable as investors were eyeing the Bank of England’s next inflation report, amid growing speculation that the bank may downgrade its 2011 and 2012 growth forecast.
Elsewhere, the pound was up against the euro with EUR/GBP dipping 0.32%, to trade at 0.8541.
Later in the day, the U.K. was to release official data on consumer price inflation.
The U.S. was also to release official data on retail sales and producer price inflation.
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