Forexpros – The pound trimmed losses against the U.S. dollar on Tuesday, pulling back from a more than three-week low, but sterling remained vulnerable as investors remained unsettled amid fears over the deepening euro zone debt crisis.
GBP/USD pulled back from 1.5830, the pair’s lowest since October 21, to hit 1.5886 during European afternoon trade, still down 0.14% on the day.
Cable was likely to find support at 1.5753, the low of October 21 and resistance at 1.5931, the days high.
Concerns over the financial crisis in the single currency bloc mounted as Italy’s 10-year bond yields rose to near unsustainable levels, climbing above 7% earlier, while the yield on Spanish 10-year bonds rose above 6% for the first time since the European Central Bank started to buy the country’s bonds in August.
In the U.K., official data showed that consumer price inflation in the U.K. eased in October, ticking down to 5%, from a three-year high of 5.2% the previous month.
Analysts had expected CPI to tick down to 5.1% last month.
Following the data, Bank of England Governor Mervyn King reiterated that temporary factors were fuelling price increases and said he expected inflation to fall back to close to the central bank’s targeted rate of 2% by the end of 2012.
King also said the economic outlook for the U.K. had deteriorated since August, justifying the bank’s decision to implement fresh monetary stimulus measures last month.
Meanwhile, the pound was higher against the euro, with EUR/GBP shedding 0.43% to hit 0.8532.
Later in the day, the U.S. was to release official data on retail sales and producer price inflation.
Forexpros
