Forexpros – The pound inched lower against the U.S. dollar on Tuesday, pulling back from a six-week high amid caution ahead of Wednesday’s critical European Union summit and as Bank of England policymakers prepared to testify on the resumption of monetary easing.
GBP/USD retreated from 1.6022 the pair’s highest since September 8, to hit 1.5987 during European morning trade, dipping 0.06%.
Cable was likely to find support at 1.5843, the low of September 8 and resistance at 1.6038, the high of September 7.
Later in the morning, BoE Governor Mervyn King and Deputy Governor Charles Bean were to give evidence to the U.K.’s Treasury Select Committee on the second round of quantitative easing, voted for unanimously by the central bank at its October policy meeting.
Meanwhile, risk appetite was weighed by uncertainty over the outcome of Wednesday’s EU summit, which investors hoped would yield a breakthrough on dealing with the debt crisis in the region.
Over the weekend, EU leaders moved closer to an agreement on bank recapitalization and expanding the firepower of the euro zone’s bailout fund, but divisions over restructuring Greek debt remained.
The pound was almost unchanged against the euro, with EUR/GBP inching up 0.01% to hit 0.8708.
Also Tuesday, official data showed that the U.K.’s current account deficit unexpectedly contracted to GBP2.0 billion in the second quarter, narrowing from a deficit of GBP4.1 billion in the preceding quarter. Analysts had expected the deficit to widen to GBP 9.9 billion.
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