Forexpros – The pound trimmed gains against the U.S. dollar on Thursday, pulling back from a three-week high as growing fears over sovereign debt contagion in the euro zone and concerns over U.S. debt levels weighed on risk appetite.
GBP/USD pulled back from 1.6193, the pair’s highest since June 22, to hit 1.6112 during European afternoon trade, still up 0.05% on the day.
Cable was likely to find support at 1.5904, Wednesday’s low and resistance at 1.6262, the high of June 22.
Earlier in the day, Italy auctioned EUR1.25 billion of five-year bonds at an average yield of 4.93%, the highest since June 2008 and up significantly from 3.9% in June.
The country also sold EUR1.71 billion of 15-year bonds at a record-high yield of 5.9%, compared to 5.34% from a previous auction.
It was the first sale of longer-term debt since Italy’s 10-year yield soared to a euro-lifetime high of 6.02% on July 12.
Italy is the euro zone’s third largest economy and has the highest sovereign debt ratio relative to its economy in the single currency bloc after Greece, which saw its credit rating reduced to CCC by Fitch ratings agency on Wednesday, saying that a default was a “real possibility.”
Meanwhile, Moody’s Investors Service said late Wednesday that it placed the U.S. government’s Aaa bond rating on review for possible downgrade for the first time since 1995, citing “a small but rising risk” of a short-lived default.
Elsewhere, the pound was down against the euro, with EUR/GBP edging up 0.12% to hit 0.8805.
Later in the day, the U.S. was to release a string of economic data, including a report on retail sales, producer price inflation, as well as weekly government data on initial jobless claims.
Also Thursday, Fed Chair Ben Bernanke was to deliver the second part of his testimony on monetary policy in Washington.
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