Forexpros – The pound remained lower against the U.S. dollar on Thursday, as uncertainty over the outcome of this week’s European summit continued to weigh on market sentiment amid fears that political leaders will not manage to agree on ways to tackle the region’s debt crisis.
GBP/USD hit 1.5507 during U.S. morning trade, the pair’s lowest since June 15; the pair subsequently consolidated at 1.5519, shedding 0.32%.
Cable was likely to find support at 1.5471, the low of June 14 and resistance at 1.5622, the session high.
Market sentiment weakened after a German government official indicated earlier that the European Union summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit on Friday.
Earlier in the week, German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds, while EU Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday that the summit would focus on short-term measures to stabilize markets and ease pressure on at-risk countries.
Adding to concerns, Italy saw long term borrowing costs rose to 6.19%, their highest level since December, following an auction of 10-year bonds, while the yield on Spanish 10-year bonds ticked up to 7%, the level that prompted Greece, Ireland and Portugal to seek bailouts.
In the U.K., official data confirmed that the country’s economy contracted by 0.3% in the three months to March, but the contraction in the previous quarter was revised up to 0.4%, from a preliminary estimate of 0.3%.
A separate report showed that the U.K. current account deficit widened to GBP11.17 billion in the first quarter, from a shortfall of GBP7.22 billion in the fourth quarter. Economists had expected the current account deficit to widen to GBP9.0 billion.
The weak data reinforced expectations that the Bank of England may implement a third round of quantitative easing measures to shore up growth, possibly as soon as next month.
Elsewhere, the pound was steady against the euro with EUR/GBP easing up 0.05, to hit 0.8013.
Also Thursday, the U.S. Department of Labor said the number of people who filed for unemployment assistance last week fell to a seasonally adjusted 386,000, compared to expectations for a decline to 385,000.
The previous week’s figure was revised up to 392,000 from a previously reported 387,000.
A separate report confirmed that the U.S. economy expanded at an annualized rate of 1.9% during the first quarter, in line with expectations.
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