Forexpros – The pound trimmed gains against the U.S. dollar on Tuesday, pulling back from a one-week high after the British government cut its forecast for economic growth and said it would take longer than expected to cut the U.K. deficit.
GBP/USD retreated from 1.5656 the pair’s highest since November 22, to hit 1.5596 during European afternoon trade, still up 0.53% on the day.
Cable was likely to find support at 1.5423, Friday’s low and a seven-week low and resistance at 1.5594, Monday’s high.
In the U.K. government’s autumn budget statement, Chancellor George Osborne said the economy was now expected to grow 0.7% in 2012, down from a March budget forecast of 2.5% growth.
Growth was then expected to recover to 2.1% in 2013.
Osborne also said borrowing will fall much less than expected, meaning that harsh austerity measures will last beyond 2015.
“Much of Europe appears to be heading into recession caused by a chronic lack of confidence in the ability of countries to deal with their debts. We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth,” he said.
The pound remained supported ahead of a keenly awaited meeting of euro zone finance ministers later in the day. The ministers were expected to approve plans to enlarge the scope of the region’s bailout fund and to sign off on Greece’s next tranche of financial aid.
The pound was also higher against the euro, with EUR/GBP shedding 0.52% to hit 0.8540.
Later in the day, the U.S. was to release industry data on house price inflation as well as a report on consumer confidence.
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