Forexpros – The pound erased gains against the U.S. dollar on Monday, after preliminary data showed that the U.K. economy contracted by the most since the first quarter of 2009 in the three months to June.
GBP/USD pulled back from 1.5550, the session high, to hit 1.5479 during European morning trade, down 0.18%.
Cable was likely to find support at 1.5412, the low of July 13 and resistance at 1.5550, the session high.
The Office for National Statistics said the U.K.’s gross domestic product contracted by 0.7% in the second quarter, far more than the 0.2% contraction economists had forecast, extending Britain’s recession into a third quarter.
The U.K.’s economy shrank by 0.3% in the first three months of 2012.
Year-over-year, U.K. economic growth contracted 0.8% in the second quarter, disappointing expectations for a decline of 0.3%.
The report said that the service sector shrank by 0.1% during the quarter, while industrial output declined by 1.3%. Meanwhile, construction sector output dropped by 5.2%.
The ONS said that the extra public holiday for the Diamond Jubilee and poor weather weighed on economic activity.
The pound pulled back from a three-and-a-half year low against the euro, with EUR/GBP up 0.70% to 0.7832.
The euro found support following comments from European Central Bank policymaker Ewald Nowotny, who said that there were some arguments in favor of giving the euro zone’s bailout fund, the European Stability Mechanism, a banking license, which would increase its firepower.
Later in the day, the U.S. was to publish official data on new home sales, as well as a report on crude oil stockpiles.
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