Forex Pros – The pound trimmed losses against the U.S. dollar on Wednesday, pulling back from a two day low, as oil prices rebounded amid renewed concerns that escalating tension in Libya would disrupt supplies.
GBP/USD clawed back up from 1.6216, the pair’s lowest since Monday, to hit 1.6253 during European morning trade, dipping 0.07%.
Cable was likely to find support at 1.6070, Monday’s low and resistance at 1.6329, Tuesday’s high and a 13-month high.
Crude futures for delivery in April were trading at USD99.89 a barrel on the New York Mercantile Exchange, after peaking at USD100.57 earlier, amid concerns over ongoing violence in Libya and protests in Bahrain, Iran and Yemen.
The dollar has been hurt by the recent spike in oil prices amid fears over the inflationary impact on the U.S. economy, given its strong reliance on consumer spending for growth.
The greenback came under pressure even after Federal Reserve Chairman Ben Bernanke said Tuesday that the recent oil price rally was unlikely to hurt the U.S. economy, unless it was sustained.
In prepared testimony before the Senate Banking Committee, Bernanke also said that while he saw increasing evidence the U.S. economic recovery had gained enough momentum to become self-supporting, employment growth remained too weak.
The pound was also down against the euro, with EUR/GBP easing up 0.10% to hit 0.8478.
Later Wednesday, Ben Bernanke was to testify for a second day before the Senate Banking Committee, while the Fed was to publish its Beige Book. The U.S. was also to publish data on private sector payrolls compiled by payroll processing firm ADP. Meanwhile, the U.K. was to publish its construction PMI.
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