Forexpros – The pound was steady against the U.S. dollar in thin year-end trade on Wednesday, after a well-received Italian bond auction as investors remained cautious ahead of a second government bond sale programmed on Thursday.
GBP/USD hit 1.5692 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.5672, easing up 0.02%.
Cable was likely to find support at 1.5595, Tuesday’s low and resistance at 1.5728, the high of December 22.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
The euro found support after a stronger-than-expected auction of Italian government debt earlier in the day.
Italy’s Treasury sold EUR9 billion of six-month bills, at an average yield of 3.25%, down from a record-high 6.50% in a previous auction in November. The country also sold EUR1.73 of two-year zero-coupons at a 5% yield.
Following the auction, the yield on Italy’s 10-year bonds traded at 6.82%, falling below the 7% threshold widely seen as unsustainable in the long-term.
Despite the upbeat results, Thursday’s sale of EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 was seen as a bigger test of market confidence in the country’s sovereign debt.
Meanwhile, sterling was almost unchanged against the euro with EUR/GBP edging up 0.01%, to hit 0.8341.
No major economic data was due for release Wednesday.
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