Investing.com - The pound pulled away from 31-month lows against
the dollar on Wednesday, but gains were capped as concerns over the
economic outlook weighed after official data confirmed that the
U.K. economy contacted 0.3% in the fourth quarter.
GBP/USD hit 1.5081 during European afternoon trade, the session
high; the pair subsequently consolidated at 1.5157, rising 0.21%.
Cable was likely to find near-term support at 1.5068, Monday's low
and the pair's lowest since July 2010 and resistance at 1.5198,
The Office for National Statistics said the U.K. economy contracted
0.3% in the three months to December, in line with initial
estimates and economists' forecasts.
The economy expanded by 0.3% year-on-year, better than initial
estimates of flat output.
The weak data reinforced concerns over the threat of a triple-dip
recession, after ratings agency Moody's downgraded the U.K.'s
triple-A rating by one notch last week, citing a weak outlook for
growth and a rising debt burden.
Meanwhile, expectations for further monetary easing by the Bank of
England remained intact after the minutes of the central bank's
February meeting indicated that policymakers are moving closer to
another round of asset purchases.
Overall market sentiment remained subdued amid fears that
inconclusive Italian election results could result in a prolonged
period of political instability and stoke fresh concerns over the
crisis in the euro zone.
An auction of Italian five and 10-year Italian government bonds met
with solid investor demand on Wednesday, but saw borrowing costs
rise sharply, with the yield on 10-year bonds climbing to a four
Sterling was lower against the euro, with EUR/GBP easing up 0.14%
The U.S. was to publish official data on durable goods orders and
pending home sales later Wednesday, while European Central Bank
President Mario Draghi was to speak an event in Germany.
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