Forexpros – The pound remained moderately higher against the U.S. dollar on Tuesday, as hopes for progress in tackling Spain’s financial crisis continued to support sentiment, although soaring borrowing costs and uncertainty over the results of the country’s bailout limited gains.
GBP/USD hit 1.5558 during U.S. morning trade, the daily high; the pair subsequently consolidated at 1.5524, adding 0.25%.
The pair was likely to find support at 1.5428, the low of June 7 and resistance at 1.5599, the high of June 7.
Investors remained cautious as the exact amount Spain is to receive to recapitalize its banks will only be decided later this month, after the results of independent audits are published.
In addition, questions remained over the source of the funds and whether the bailout repayments would add to the country’s already high borrowing costs, as the yield on Spanish 10-year bonds climbed to a record high of 6.82%, moving closer to the critical 7% threshold which precipitated bailouts in Greece, Ireland and Portugal.
Markets were also jittery ahead of Sunday’s general election in Greece, which could decide the course of the country’s future in the euro zone.
The pound came under pressure earlier, after the Office for National Statistics said that manufacturing output in the U.K. fell 0.7% in April, following a 0.9% increase in March, disappointing expectations for a more modest 0.2% decline.
Industrial production was flat in April, disappointing expectations for a 0.1% increase, after declining 0.3% in March.
The weaker-than-expected data fuelled speculation that the Bank of England may implement more monetary stimulus measures in order to shore up economic growth in the U.K.
Elsewhere, sterling was higher against the euro with EUR/GBP shedding 0.49%, to hit 0.8022.
Later in the day, the U.S. was to publish a government report on federal budget balance.
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