Forexpros – The pound erased gains against the U.S. dollar on Tuesday, pulling back from a daily high hit after the Swiss National Bank’s intervention in currency markets boosted the euro broadly, which in turn pulled the pound higher.
GBP/USD retreated from 1.6202, the daily high, to hit 1.6091 during European afternoon trade, sliding 0.15%.
Cable was likely to find support at 1.6004, the low of July 18 and resistance at 1.6185, Monday’s high.
The euro posted sharp gains against its major counterparts earlier, after the SNB announced that it had set a minimum exchange rate target of 1.20 per euro for the Swiss franc.
The SNB said the massive overvaluation of the currency posed an acute threat to the Swiss economy and carried a risk of deflation. The central bank also said it was prepared to defend the rate with the “utmost determination” by purchasing foreign currency in “unlimited quantities.”
But the pound gave up gains as a combination of worries that the debt crisis in the euro zone is deepening and fears that the U.S. is slipping back into a recession weighed.
Meanwhile, concerns over the outlook for the U.K. economy continued after the British Retail Consortium said earlier that retail sales in the U.K. fell in August as consumers cut back spending on non-essential items, such as home ware and furniture.
The pound remained down against the euro, with EUR/GBP rising 0.69% to hit 0.8806.
Later Tuesday, the Institute of Supply Management was to produce a report on U.S. service sector activity.
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