Forex Pros – The pound extended losses against the U.S. dollar on Wednesday, slumping to a four-day low after a surprise Chinese rate hike, while renewed concerns over the euro zone’s sovereign debt crisis also weighed.
GBP/USD hit 1.5984 during European afternoon trade, the pair’s lowest since June 20; the pair subsequently consolidated at 1.5999, dropping 0.38%.
Cable was likely to find support at 1.5910, the low of June 28 and a five-month low and resistance at 1.6127, Tuesday’s high.
The People’s Bank of China said earlier that it had raised its benchmark interest rate by 0.25% to 6.56% from 6.31% effective July 7.
It was the fifth interest rate hike since October 2010 and the third in 2011, in an effort to curb accelerating consumer prices in China, which rose to a 34-month high in May.
The pound weakened after ratings agency Moody’s downgraded Portugal’s credit rating by four notches to Ba2 on Tuesday, saying there was growing risk the country will need a second round of official financing before it can return to capital markets.
The pound shrugged off earlier data showing that house prices in the U.K. rose unexpectedly in June, posting the largest month-on-month gain in eight months.
Mortgage lender Halifax said house prices rose 1.2% in June after rising by an upwardly revised 0.4% the previous month. Analysts had expected house prices to increase by just 0.1% last month.
Meanwhile, the pound was up against the euro, with EUR/GBP shedding 0.28% to hit 0.8958.
Later Wednesday, the U.S. Institute of Supply Management was to publish a report on service sector growth.
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