Forexpros – The pound trimmed losses against the U.S. dollar on Monday, but market sentiment remained downbeat amid ongoing fears over the debt crisis in the euro zone.
GBP/USD pulled back from 1.5538, the pair’s lowest since November 30 to hit 1.5607 during U.S. morning trade, still down 0.39%.
Cable was likely to find support at 1.5494, the low of November 23 and resistance at 1.5734, the high of December 9.
Moody’s Investors Service said it will review the ratings of all EU countries in the first quarter, adding that last week’s economic summit failed to deliver “decisive policy measures” to end the region’s debt crisis.
EU leaders agreed Friday to implement stricter budgetary rules across the euro zone and to provide EUR200 billion in loans to the International Monetary Fund to assist countries with debt problems.
But U.K. Prime Minister David Cameron vetoed EU treaty changes aimed at tightening fiscal rules after failing to secure concessions relating to London’s financial services industry.
Meanwhile, investors remained jittery after the European Central Bank indicated that it had no plans to increase its bond purchasing program, capping its weekly bond purchases at EUR20 billion.
Earlier Monday, Standard & Poor’s chief European economist said Friday’s agreement was a significant step in resolving a “crisis of confidence,” but warned that time is running out and more action is needed.
The comments came after S&P placed the credit ratings of 15 euro zone members, including France and Germany, on watch for a potential downgrade last week.
Elsewhere, sterling was sharply higher against the euro with EUR/GBP plunging 0.88%, to hit 0.8466.
Also Monday, Italy’s Treasury sold the full targeted amount of EUR7 billion of 12-month government bonds at an average yield of 5.95% compared to 6.08% at a bond auction last month.
Following the auction, the yield on Italian 10-year government bonds climbed back towards the near unsustainable levels hit last month, rising to 7.18%.
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