Forexpros – The pound was down against the U.S. dollar on Wednesday, as concerns over the unresolved sovereign debt crisis in the euro zone weighed on demand for higher yielding assets.
GBP/USD hit 1.5581 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.5599, shedding 0.31%.
Cable was likely to find support at 1.5500, Tuesday’s low and resistance at 1.5668, the session high.
Market sentiment softened after a closely watched auction of German government bonds met with lackluster investor demand and failed to ease investor concerns over borrowing conditions in the euro zone.
Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November’s launch of the January 2022 bond, which was the worst German bond auction on record.
Meanwhile, concerns over the health of the European banking sector also weighed after a report showing that bank deposits at the European Central Bank’s overnight facility reached a new all-time high of EUR453 billion on Tuesday, underlining the unwillingness of European banks to lend to each other.
In the U.K., a report showed that construction sector activity unexpectedly improved in December, extending the period of sustained expansion to 12 months.
In a separate report, the Bank of England said that net lending to individuals rose in line with expectations in November.
Elsewhere, the pound advanced to a 16-month peak against the broadly weaker euro, with EUR/GBP tumbling 0.74% to hit 0.8277.
Also Wednesday, official data showed that U.S. factory orders rose for the first time in three months in November, climbing1.8%, just shy of expectations for a 1.9% gain.
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