Forexpros – The pound extended losses against the U.S. dollar on Thursday, falling to a fresh daily low after European Central Bank President Mario Draghi quashed expectations for increased bond purchases by the bank.
GBP/USD hit 1.5611 during U.S. morning trade, the daily low; the pair subsequently consolidated at 1.5627, shedding 0.53%.
Cable was likely to find support at 1.5525, the low of November 30 and resistance at 1.5723, Wednesday’s high.
Market sentiment was hit after Draghi said the ECB could not circumvent a treaty which prevents it from giving monetary financing to governments, saying that it was “legally complex” for euro zone central banks to lend to the International Monetary Fund.
Draghi also stopped short of giving any commitment to increased purchases of government bonds, saying the bank’s bond purchasing program was “neither eternal nor infinite”.
The ECB did unveil new measures to increase liquidity, including unlimited 36-month credit for euro zone banks, the easing of collateral requirements for ECB loans and a reduction in the reserve requirement for commercial lenders.
The announcement came after the ECB cut its benchmark interest rate by 0.25%, bringing rates to a record low of 1%.
Meanwhile, investors remained cautious amid uncertainty over the outcome of a critical two-day European Union summit aimed at reaching a breakthrough on an agreement to arrest the spread of the debt crisis in the euro zone.
Earlier in the day, the Bank of England kept interest rates steady at a record low 0.5%, where they have been since March 2009 and announced no change to its asset purchase program, which it increased to GBP275 billion in October.
The pound was higher against the euro, with EUR/GBP shedding 0.18% to hit 0.8520.
Also Thursday, the U.S. Department of Labor said earlier that jobless claims fell to a nine-month low last week, declining to 381,000 after a 404,000 increase the previous week.
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