Forexpros – The pound erased gains against the U.S. dollar on Thursday, pulling back from a session high as ongoing concerns over Italy’s financial woes and the debt crisis in the euro zone weighed on demand for riskier assets.
GBP/USD pulled back from 1.5985, the daily high to hit 1.5902 during U.S. morning trade, inching down 0.07%.
The pair was likely to find support at 1.5843, the low of September 9 and resistance at 1.6007, the high of October 24.
Market sentiment strengthened earlier, after Italy auctioned EUR5 billion of one-year Treasury bills at an average yield of 6.08%, the highest since September 1997, but still well below analyst expectations of 7%.
Following the auction, the yield on 10-year Italian bonds eased, after rising past the 7% threshold, a level widely considered unsustainable for continued borrowing.
Meanwhile, Italian lawmakers prepared a package of deficit reduction and economic stimulus measures demanded by the European Union, ahead of a vote this weekend.
In Greece, former European Central Bank Vice President Lucas Papademos was chosen to head the country’s new national unity government, ending three days of negotiations amid growing fears of a Greek default.
Earlier in the day, the Bank of England left interest rates unchanged at a record low 0.5% earlier.
In October, the central bank restarted its quantitative easing program with a plan to buy a further GBP75 billion of government bonds, on top of the GBP200 billion of purchases it made from 2009 to 2010.
Elsewhere, the pound was down against the euro with EUR/GBP rising 0.26%, to hit 0.8532.
Also Thursday, U.S. data showed that jobless claims declined last week for the second straight week to the lowest level since April, while the trade deficit unexpectedly shrank in September to its narrowest level since December.
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