Forexpros – The pound trimmed gains against the U.S. dollar on Tuesday, after disappointing U.S. consumer confidence as concerns over rising borrowing costs in Italy and Spain and uncertainty over the outcome of this week’s European summit in Brussels continued to weigh.
GBP/USD pulled away from 1.5651, the pair’s highest since June 21, to hit 1.5607 during U.S. morning trade, still up 0.21%.
Cable was likely to find support at 1.5537, Monday’s low and resistance at 1.5698, the high of May 25.
Industry data showed earlier that U.S. consumer confidence declined more-than-expected in June, falling for the fourth consecutive month and hitting the lowest level since January.
The Conference Board said its index of consumer confidence fell to 62.0 in June from a reading of 64.4 in May, whose figure was revised down from 64.9. Analysts had expected the index to decline to 63.5 in June.
The report came after Standard & Poor’s with Case-Shiller said its house price index fell at an annualized rate of 1.9% in April from a year earlier, better than expectations for a 2.5% drop, but still declining for the 22nd consecutive month.
Meanwhile, market sentiment remained vulnerable as the yield on Spanish 10-year bonds rose to 6.71% following three- and six-month government debt auctions, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Markets were also jittery amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
Sterling rose to a three-day high against the dollar earlier, after Bank of England Governor Mervyn King said an interest rate cut would be less effective in stimulating the economy than more quantitative easing.
In testimony to Parliament’s Treasury Committee, King said the outlook for the U.K. economy had deteriorated in recent weeks as a result of the ongoing debt crisis in the euro zone.
The comments came after official data showed that public sector net borrowing in the U.K. rose to GBP17.9 billion in May, up from GBP15.2 billion in the same month last year.
Sterling was also higher against the euro with EUR/GBP shedding 0.44%, to hit 0.7993.
Later Tuesday, finance ministers from Germany, France, Italy and Spain were to meet in Paris, to hold talks ahead of the EU summit on Thursday and Friday.
Forexpros
