Forexpros – The pound extended losses against the U.S. dollar amid widespread risk aversion on Wednesday, as concerns over the deepening debt crisis in the euro zone and lackluster U.S. data clouded the outlook.
GBP/USD hit 1.5529 during U.S. morning trade, the pair’s lowest since October 10; the pair subsequently consolidated at 1.5527, shedding 0.65%.
Cable was likely to find support at 1.5421, the low of October 7 and resistance at 1.5655, the days high.
Concerns that the euro zone debt crisis is spreading to core economies mounted after Germany’s Treasury auctioned just EUR3.64 billion of 10-year government bonds with the average yield set at 1.98% earlier.
Total bids for German debt fell short of the maximum amount available by 35%, the worst demand on record.
The auction came after preliminary data showed that the euro zone manufacturing purchasing managers’ index slumped to the lowest level since July 2009 in November.
Meanwhile, reports saying that Belgium and France were in fresh talks over an existing rescue deal for troubled lender Dexia sparked concerns that France would have to take a larger part in the bailout, which could have implications for the country’s triple A credit rating.
In the U.S., official data showed that new orders for long-lasting manufactured goods unexpectedly rose in October, but the previous month’s number was revised down sharply.
The Commerce Department said durable goods orders, excluding transportation, rose 0.7% after a downwardly revised 0.6% increase in September. Analysts had expected the number to remain unchanged from the previously reported 1.8% increase.
Overall orders fell 0.7% after declining 1.5% in September.
In a separate report, the Labor Department said number of people who filed for unemployment assistance in the U.S. last week rose unexpectedly, climbing to a seasonally adjusted 393,000, confounding expectations for a decline to 390,000.
Also Wednesday, U.S. data showed that consumer spending edged up 0.1% in October, slowing sharply from a revised 0.7% increase the previous month.
But the pound was higher against the euro, with EUR/GBP shedding 0.34% to hit 0.8607.
Also Wednesday, the minutes of the Bank of England’s November policy meeting showed that policymakers saw little merit in “fine tuning” their stimulus program and voted unanimously to maintain the central bank’s key interest rate at 0.5% and the size of its asset purchase program at GBP275 billion.
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