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Forex - GBP/USD remains near 7-month lows in risk-off trade

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Shutterstock photo - The pound remained close to seven-month lows against the U.S. dollar on Monday, after downbeat comments by European Central Bank President Mario Draghi, while sustained concerns over the outlook for growth in the U.K. continued to weigh on demand for sterling.

GBP/USD hit 1.5438 during U.S. morning trade, the pair's lowest since July 13; the pair subsequently consolidated at 1.5470, shedding 0.29%.

Cable was likely to find support at 1.5320 the low of June 5 and resistance at 1.5507, the session high.

Draghi said that that Europe "entered 2013 in a more stable financial environment than in recent years", but warned that the economy is still weak following three quarters of contraction and will only recover slowly this year.

The comments came in testimony to the European Parliament's committee on economic and monetary affairs.

The pound came under pressure on Friday after official data showed that U.K. retail sales dropped 0.6% in January, confounding expectations for a 0.4% increase.

The data fuelled concerns over the health of the U.K. economy, which contracted by 0.3% in the fourth quarter and added to worries that the U.K. may lose its triple-A sovereign rating.

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's BoE's quarterly inflation report warned that inflation would remain above target until early 2016 and forecast weaker growth.

Elsewhere, the pound was lower against the euro with EUR/GBP edging up 0.16%, to hit 0.8624.

Also Monday, ECB Governing Council member Ewald Nowotny said the euro zone economy is likely to bottom out in the first quarter of this year before beginning a slow recovery.

Trade volumes were expected to remain light on Monday, with U.S. markets remaining closed for the President's Day holiday. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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