Forexpros – The pound trimmed losses against the U.S. dollar on Monday, pulling back from the session low, while concerns that Friday’s European Union agreement will not be enough to tackle the euro zone’s debt crisis continued to weigh on sentiment.
GBP/USD pulled away from 1.5538, the pair’s lowest since November 30, to hit 1.5641 during European afternoon trade, still down 0.18% on the day.
Cable was likely to find support at 1.5525, the low of November 30 and resistance at 1.5734, Friday’s high.
EU leaders agreed to draft a new treaty to implement tighter fiscal consolidation 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.
Investors remained jittery after the European Central Bank indicated that it had no plans to increase its bond purchasing program, capping 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.
Sentiment was also hit after ratings agency Moody’s warned earlier that the debt crisis in the euro zone was still in a “critical” and “volatile” stage, adding that the region still faced increasing risks to cohesion.
Elsewhere, the pound was higher against the euro, with EUR/GBP shedding 0.67% to hit a nine-month low of 0.8483.
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 6.91%.
Forexpros
