Forexpros – The pound extended losses against the U.S. dollar on Wednesday, falling to a three-day low as disappointing U.K. economic data continued to weigh on sterling, while investors eyed the outcome of the Bank of England’s policy-setting meeting on Thursday.
GBP/USD hit 1.5595 during U.S. morning trade, the pair’s lowest since June 29; the pair subsequently consolidated at 1.5615, dropping 0.47%.
Cable was likely to find support at 1.5544, the low of June 27 and resistance at 1.5691, the session high.
The pound came under pressure earlier, after data showed that service sector activity in the U.K. expanded at the slowest rate in eight months in June.
The Markit/CIPS Services purchasing managers’ index fell to 51.3 in June from a reading of 53.3 in May, missing expectations for a decline to 53.0.
On Thursday, the BoE was widely expected to implement a fresh round of stimulus measures, in order to shield the recession hit U.K. economy from the debt crisis in the euro zone.
Investors were also eyeing the outcome of the European Central Bank’s policy meeting, amid growing expectations for a rate cut to help bolster growth in the euro zone.
In addition, markets were looking ahead to Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the euro zone crisis.
Trade volumes were expected to remain light on Wednesday, with market in the U.S. closed for the Independence Day holiday.
Elsewhere, sterling was steady against the euro with EUR/GBP inching up 0.06%, to hit 0.8041.
Also Wednesday, the final reading of the euro zone services PMI came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but holding below the 50 level which separates contraction from growth for the fifth consecutive month.
A separate showed that retail sales in the euro zone rose by a seasonally adjusted 0.6% in May, beating expectations for a 0.3% gain, but total sales for April were revised down to a 1.4% drop from a previously reported decline of 1%.
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