Forex Pros — The pound extended losses against the U.S. dollar on Monday, sliding to a three-day low as ongoing concerns over the sovereign debt crisis in the euro zone boosted demand for traditional safe haven currencies.
GBP/USD hit 1.6109 during European early afternoon trade, the pair’s lowest since May 18; the pair subsequently consolidated at 1.6127, shedding 0.63%.
The pair was likely to find short-term support at 1.5970, the low of April 1and resistance at 1.6232, the day’s high.
Worries about Greek debt intensified after Fitch Ratings downgraded the country’s sovereign debt by three notches on Friday, while concerns that the crisis might spread to other countries escalated when Standard & Poor’s cut its outlook on Italian government debt to negative from stable Saturday.
Sentiment was also hit by a report showing that Chinese manufacturing growth slowed to its slowest pace in 10 months in May.
A preliminary reading of the Markit/HSBC manufacturing purchasing managers index was 51.1 for May compared with a final reading of 51.8 in April. A number above 50 indicates expansion in the sector.
Meanwhile, the pound was up against the euro, with EUR/GBP shedding 0.26% to hit 0.8697.
Over the weekend, the Bank of England’s chief economist Spencer Dale said the central bank must start to raise interest rates to tackle inflation or risk hurting the economy.
ForexPros.com
