Forexpros – The pound remained lower against the U.S. dollar on Monday, as concerns over rising Spanish borrowing costs and sovereign debt contagion in the euro zone continued to dampen investor confidence.
GBP/USD hit 1.5638 during U.S. morning trade, the daily low; the pair subsequently consolidated at 1.5666, falling 0.31%.
Cable was likely to find support at 1.5607, the low of May 29 and resistance at 1.5741, the session high.
Market sentiment weakened after the yield on Spanish 10-year bonds surged to a euro-era high of 7.28% amid concerns that a EUR100 billion bailout agreed earlier this month may not be enough to overhaul the country’s ailing banking system.
The 7% threshold is widely considered unsustainable in the long run and is the level at which Greece, Ireland and Portugal were forced to seek international bailouts.
Meanwhile, the yield on Italian 10-year bonds ticked up to 6.06% amid fears over sovereign debt contagion.
Investors were also wary amid concerns over the ability of Greece’s pro-austerity New Democracy party to form a viable coalition government following Sunday’s narrow election victory.
The pound was also weighed by speculation that the Bank of England may announce further quantitative easing measures, as investors looked ahead to Wednesday’s minutes from the central bank’s June meeting.
Elsewhere, sterling was higher against the euro with EUR/GBP edging down 0.12%, to hit 0.8038.
Later in the day, U.S. President Barak Obama was to hold a meeting with German Chancellor Angela Merkel, as leaders from the Group of 20 nations gathered for a two-day summit in Los Cabos, Mexico.
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