Forexpros – The pound extended losses against the U.S. dollar on Monday, falling to a new daily low after Italian borrowing costs surged to a euro-era high at an auction of five-year Treasury bills.
GBP/USD hit 1.5923 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.5937, dropping 0.79%.
Cable was likely to find support at 1.5753, the low of October 21 and resistance at 1.6129, the high of November 8.
Italy’s Treasury raised the maximum targeted amount of EUR3 billion at the sale, but yields on the five-year bonds rose to a euro-era high of 6.29%, up from 5.32% at a similar auction a month ago.
Last week, the yield on Italian 10-year bonds climbed above the 7% threshold which precipitated bailouts in Greece, Ireland and Portugal, before falling back.
Over the weekend, Italy’s President Giorgio Napolitano appointed former European Commissioner Mario Monti to head a new government as the country attempts to implement austerity measures while simultaneously shoring up economic growth.
Elsewhere, the pound was down against the euro with EUR/GBP rising 0.11%, to trade at 0.8569.
Earlier Monday, official data showed that industrial output in the euro zone fell at the fastest pace in two-and-a-half years in September, dropping 2%, slightly less than expectations for a 2.2% decline, but erasing all of the previous month’s 1.4% gain.
The weak data underlined concerns over the threat of an economic downturn in the single currency bloc.
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