Forex - GBP/USD steady close to seven-month lows

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Investing.com - The pound was steady near seven month lows against the dollar on Tuesday as fears over the economic outlook and the risk of the U.K. losing its triple-A sovereign rating curbed investor demand for sterling.

GBP/USD hit 1.5454 during European afternoon trade, the session low; the pair subsequently consolidated at 1.5459, dipping 0.04%.

The pair was likely to find near-term support at 1.5436, Monday's low and the pair's lowest since July 13 and resistance at 1.5507, Monday's high.

The pound remained under pressure after last week's dismal U.K. retail sales data for January fuelled concerns over the faltering economy, which contracted by 0.3% in the three months to December.

Sentiment on sterling was also hit after Bank of England policymaker Martin Weale said Saturday that a weaker currency was a natural way to reduce the country's current account deficit and that the central bank should overlook the inflationary impact of the weaker pound.

Last week the BoE's quarterly inflation report warned that inflation would remain above target until early 2016.

Elsewhere, the pound was almost unchanged against the euro, with EUR/GBP inching down 0.02% to 0.8628 but was lower against the yen, with GBP/JPY down 0.50% to 144.57.

The euro remained under pressure as uncertainty over Italian elections this weekend overshadowed data showing that German economic sentiment jumped to a 34-month high in February.

The ZEW index of German economic sentiment jumped to 48.2 in February, the highest since April 2010, from 31.2 in January. Analysts had expected the index to rise to 35.0 this month.

The yen was broadly higher on Tuesday after Japanese Finance Minister Taro Aso said the government is not considering buying foreign bonds through a fund with the Bank of Japan, one day after Prime Minister Shinzo Abe said the idea was one option for monetary easing.



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This article appears in: Investing , Forex and Currencies

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