Forexpros – The pound pared gains against the U.S. dollar on Wednesday, pulling away from a four-day high as comments by European Central Bank President Mario Draghi disappointed, while markets hoped for further easing measures by the Federal Reserve.
GBP/USD pulled back from 1.5516, the pair’s highest since May 31, to hit 1.5461 during U.S. morning trade, still up 0.51%.
Cable was likely to find support at 1.5359, the low of May 31 and resistance at 1.5577, the high of January 20.
Speaking at the ECB’s post policy meeting press conference, Draghi said that there were downside risks to the European economy, stemming from the debt crisis in the region and its growing potential to spill over to the wider economy.
Draghi said the bank would extend its policy of lending banks until mid-January 2013 but didn’t announce any new three-year lending operations, disappointing market expectations for fresh easing measures to stabilize markets.
The comments came after the central bank left interest rates unchanged at 1%, in a widely expected move.
But sterling remained supported as investors turned to a Congressional testimony by Federal Reserve Chairman Ben Bernanke on Thursday about the state of the U.S. economy.
The Wall Street Journal, citing interviews and Fed speeches, reported late Tuesday that the U.S. central bank is mulling new measures to stimulate growth in the world’s largest economy.
Charles Evans, president of the Chicago Federal Reserve Bank called earlier for aggressive policy easing in the U.S., citing the recent run of “soft” economic data.
Elsewhere, the pound was higher against the euro with EUR/GBP falling 0.17%, to hit 0.8080.
Also Wednesday, the Markit/CIPS U.K. construction purchasing managers’ index came in at 54.4 in May, down on April’s 55.8, but still well above the 50-point mark that separates growth from contraction. Economists had expected the index to decline to 54.2 in May.
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