Forexpros – The pound extended losses against the U.S. dollar on Wednesday, falling to a fresh four-month low as concerns that the debt crisis in the euro zone is deepening sent investors fleeing towards the safety of the greenback.
GBP/USD hit 1.5523 during U.S. morning trade, the pair’s lowest since January 23; the pair subsequently consolidated at 1.5530, shedding 0.70%.
Cable was likely to find near term support at 1.5449, the low of January 20 and resistance at 1.5643, the session high.
The greenback strengthened broadly amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to 6.7% earlier Wednesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Investor sentiment briefly found support earlier after the European Commission said that stricken euro zone banks could be recapitalized directly through the region’s permanent bailout fund.
In its report on euro zone economic strategy, the Commission also supported the idea of “joint debt issuance” or euro bonds, an idea which has met strong opposition from Germany, and said the euro zone should move towards the idea of a full banking union.
Meanwhile, concerns over the outcome of Greek elections mounted after an opinion poll showed anti-austerity party Syriza in the lead ahead of the June 17 vote, fuelling concerns that the country will reject the terms of its bailout agreement and be forced out of the euro area.
The pound was little changed earlier after data in the U.K. showed that net lending to individuals ticked higher in April, rising by GBP1.4 billion, slightly above expectations for a GBP1.2 billion increase.
A separate report showed that U.K. mortgage approvals also edged higher last month.
The pound was marginally higher against the euro, with EUR/GBP slipping 0.08% to hit 0.7985.
In the U.S., the National Association of Realtors said earlier that its pending home sales index tumbled by 5.5% in April, confounding expectations for a modest 0.1% decline.
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