Forexpros – The pound eased off a two-week low against the U.S. dollar on Wednesday, but gains were capped as elevated Italian bond yields added to concerns that last week’s European Union summit made little progress in tackling the region’s debt crisis.
GBP/USD hit 1.5531 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.5490, adding 0.07%.
Cable was likely to find support at 1.5423, the low of November 25 and resistance at 1.5594, the high of November 28.
Market sentiment has been hit in recent days by the view that last week’s European Union summit did not result in decisive plans to tackle the debt crisis in the euro zone.
Earlier in the day, Italy’s Treasury sold the full targeted amount of EUR3 billion of five-year government bonds, at an average yield of 6.47%, a euro era high, after paying 6.29% at a similar auction in November.
Following the auction, the yield on Italian 10-year bonds was above the critical 7% threshold, re-approaching the euro-era highs hit last month.
Meanwhile, investors remained cautious after the Federal Reserve warned that market turbulence stemming from the crisis in the euro zone posed a threat to the U.S. economy but stopped short of indicating fresh stimulus measures to shore up growth.
In the U.K., official data showed that the number of people claiming unemployment benefits rose less-than-expected in December, advancing by 3,000 after a rise of 2,500 the previous month.
Analysts had expected the number of people claiming unemployment benefits to rise by 16,100 in November.
The report also showed that the U.K. unemployment rate remained unchanged at 8.3%, despite expectations for a rise to 8.4%.
Elsewhere, sterling was higher against the euro with EUR/GBP shedding 0.55%, to hit 0.8375.
Also Wednesday, Germany auctioned EUR4.18 billion of two-year bonds at euro-era low yields, reassuring investors after an auction of 10-year bonds last month met with extremely weak investor demand.
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