Forexpros – The pound fell to a three-month low against the broadly stronger U.S. dollar on Wednesday, as a combination of worries over the ongoing debt crisis in the euro zone and the outlook for the U.K. economy weighed.
GBP/USD hit 1.5345 during U.S. morning trade, the pair’s lowest since October 6; the pair subsequently consolidated at 1.5351, dropping 0.84%.
Cable was likely to find support at 1.5270, the low of October 6 and resistance at 1.5490, the session high.
The dollar strengthened broadly earlier after Fitch Ratings said the European Central Bank needs to do more to prevent the collapse of the euro, saying the bank should step up its bond purchasing program to support troubled euro zone states.
Elsewhere, revised data showing that the euro zone’s economy grew less than initially expected in third quarter of 2011 underscored fears over impact of the region’s financial crisis on the outlook for growth.
Markets were also jittery ahead of Thursday’s ECB policy meeting and government bond auctions by Spain and Italy later in the week.
In the U.K., official data showed that the goods trade deficit expanded more-than-expected in November as exports declined, underlining concerns that the economy is faltering.
The goods trade deficit widened to GBP8.6 billion, compared with the deficit of GBP7.9 billion in October.
Analysts had expected the goods trade deficit to expand to GBP8.3 billion in November.
The pound was also lower against the euro, with EUR/GBP easing up 0.11% to hit 0.8261.
Also Wednesday, Italian Prime Minister Mario Monti has said his country has enacted painful reforms and should no longer be seen as a “possible source of contagion for Europe”.
Forexpros
