Forexpros – The pound pared gains against the U.S. dollar on Wednesday, as risk appetite ebbed amid renewed concerns over the debt crisis in the euro zone after a refinancing operation by the European Central Bank.
GBP/USD retreated from 1.5773, the pair’s highest since December 8, to hit 1.5690 during European afternoon trade, still up 0.18% on the day.
Cable was likely to find support at 1.5657, the days low and resistance at 1.5773, the days high and a nine-day high.
Earlier in the day, the ECB allotted EUR489.19 billion in three-year loans to 523 European banks in an attempt to avert a liquidity crunch in the euro zone.
It is hoped that the funds may also be used by lenders to purchase the sovereign debt of indebted euro zone states, easing pressure on borrowing costs.
The amount allotted was the largest ever for a longer-term refinancing operation by the ECB and underlined concerns over the scale of the financial crisis in the euro zone.
In the U.K., the minutes of the Bank of England’s December meeting showed that policymakers believed the balance of risks for growth and the outlook for inflation had not significantly altered from the previous month, but indicated that the bank may increase its asset purchase program in the New Year.
“Some members continued to note that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchases program might well become warranted in due course,” the minutes said.
Earlier Wednesday, a report by researchers GfK showed that consumer confidence in the U.K. weakened in December, hitting the lowest level since February 2009.
The pound surged to a one-year high against the euro, with EUR/GBP shedding 0.49% to hit 0.8310.
Later Wednesday, the U.S. was to produce industry data on existing home sales.
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