Forexpros – The pound added to losses against the U.S. dollar on Wednesday, after poor demand at a German debt auction and weak euro zone data added to concerns over the debt crisis in the shared currency bloc, curbing risk appetite.

GBP/USD hit 1.5554 during European afternoon trade, the pair’s lowest since October 12; the pair subsequently consolidated at 1.5564, shedding 0.42%.

Cable was likely to find support at 1.5421, the low of October 7 and resistance at 1.5691, Tuesday’s high.

Germany’s Treasury auctioned just EUR3.64 billion of 10-year government bonds with the average yield set at 1.98% in an auction earlier. Total bids for German debt fell short of the maximum amount available by 35%, the worst demand on record.

The auction came after preliminary data showing that the euro zone manufacturing purchasing managers’ index slumped to the lowest level since July 2009 in November, falling to 46.4 from 47.1 in October.

Manufacturing output in Germany also dropped to a 28-month low, underlining fears that the euro zone could be slipping into a recession.

Service sector activity in the single currency bloc improved slightly, but remained in contraction territory for the third consecutive month in November.

A separate report showed that industrial orders in the euro zone fell significantly more-than-expected in September.

Earlier Wednesday, sentiment on the single currency was hit following reports saying that Belgium and France were in fresh talks over an existing rescue deal for troubled lender Dexia.

The report sparked concerns that France would have to take a larger part in the bailout, which could have implications for the country’s AAA credit rating.

In the U.K., the minutes of the Bank of England’s November policy meeting showed that policymakers saw little merit in “fine tuning” their stimulus program and voted unanimously to maintain the central bank’s key interest rate at 0.5% and the size of its asset purchase program at GBP275 billion.

Meanwhile, the pound was higher against the euro, with EUR/GBP shedding 0.52% to hit 0.8592.

Later Wednesday, the U.S. was to publish a string of economic data ahead of Thursday’s Thanksgiving holiday, including a government report on durable goods orders, the weekly report on initial jobless claims as well as data on crude oil stockpiles, inflation, personal income and personal spending.

Meanwhile, the University of Michigan was to release revised data on inflation expectations and consumer sentiment.

Forexpros
Forexpros