Forexpros – The pound remained steady against the U.S. dollar on Wednesday, as concerns over the handling of Spain’s financial crisis and surging Italian borrowing costs continued to dominate market sentiment.
GBP/USD hit 1.5540 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.5561, inching down 0.05%.
Cable was likely to find support at 1.5482, the low of June 11 and resistance at 1.5643, the high of May 30.
Market sentiment remained vulnerable amid concerns that a bailout of as much as EUR100 billion for Spain’s banks will add to the country’s debt burden and make it more difficult for Madrid to access credit markets.
The yield on Spanish 10-year bonds ticked up to 6.76% earlier, hovering just below Tuesday’s euro-era high and close to the critical 7% threshold, which is viewed as unsustainable in the long run after it prompted bailouts in Greece, Ireland and Portugal.
Earlier Wednesday, Italy saw one-year borrowing costs surge to the highest level since December at an auction of government bonds, amid growing fears the country will be the next euro zone member to require a bailout.
Investors were also jittery ahead of Sunday’s general election in Greece, which could determine the country’s future in the euro zone.
Elsewhere, the pound was lower against the euro with EUR/GBP adding 0.41%, to hit 0.8063.
Also Wednesday, official data showed that industrial production in the euro zone fell for the second consecutive month in April, underlining fears over the health of the region’s economy.
Later in the day, the U.S. was to release official data on retail sales and producer price inflation, as well as a report on crude oil stockpiles.
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