Forexpros – The pound extended early losses against the U.S. dollar on Wednesday, tracking losses in the euro following comments by Fitch ratings agency on the euro zone’s debt crisis and after worse-than-expected euro zone economic data.
GBP/USD hit 1.5369 during European early afternoon trade, the pair’s lowest since December 29; the pair subsequently consolidated at 1.5384, shedding 0.64%.
Cable was likely to find support at 1.5330, the low of September 22 and resistance at 1.5490, the session high.
The euro fell sharply after a senior official from Fitch Ratings said the European Central Bank needs to do more to prevent the collapse of the euro, saying the bank should step up its bond purchasing program to support troubled euro zone states.
Meanwhile, revised data showing that the euro zone’s economy grew less than initially expected in third quarter of 2011 underscored fears over impact of the region’s financial crisis on the outlook for growth.
Markets were also jittery ahead of Thursday’s ECB policy meeting and government bond auctions by Spain and Italy later in the week.
In the U.K., official data showed that the goods trade deficit expanded more-than-expected in November, as exports declined and imports of oil and chemicals rose to record highs.
The goods trade deficit widened to GBP8.6 billion, compared with the deficit of GBP7.9 billion in October.
Analysts had expected the goods trade deficit to expand to GBP8.3 billion in November.
The pound was fractionally lower against the euro, with EUR/GBP inching up 0.06% to hit 0.8256.
Later Wednesday, German Chancellor Angela Merkel was to meet with Italian Prime Minister Mario Monti, to discuss plans to shore up Italy’s finances ahead of a European Union summit on January 30.
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