Investing.com - The pound extended losses against the U.S. dollar on Wednesday, amid growing risk aversion after an auction of German government debt failed to ease investor concerns over borrowing conditions in the euro zone.
GBP/USD hit 1.5594 during European early afternoon trade, the session low; the pair subsequently consolidated at 1.5614, shedding 0.21%.
Cable was likely to find support at 1.5500, Tuesday’s low and resistance at 1.5668, the session high.
Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November's launch of the January 2022 bond, which was one of the worst German debt auctions since the inception of the single currency.
The auction came after data showed that service sector activity in the euro zone contracted for the fourth consecutive month in December, albeit at a slower pace than initially estimated, underlining fears that the financial crisis is creating a drag on growth.
Adding to concerns over the euro zone’s debt woes, bank deposits at the European Central Bank's overnight facility reached a new all-time high of EUR453 billion on Tuesday, underscoring the unwillingness of European lenders to lend to each other.
In the U.K., a report showed that construction sector activity unexpectedly improved in December, extending the period of sustained expansion to 12 months.
Meanwhile, the pound was higher against the euro, with EUR/GBP shedding 0.24% to hit 0.8319.
Also Wednesday, official data showed that the rate of consumer price inflation in the euro zone eased to 2.8% from 3% in December, supporting the view that the European Central Bank could cut rates further to bolster growth.
Later in the day, the U.S. was to release official data on factory orders.
GBP/USD hit 1.5594 during European early afternoon trade, the session low; the pair subsequently consolidated at 1.5614, shedding 0.21%.
Cable was likely to find support at 1.5500, Tuesday’s low and resistance at 1.5668, the session high.
Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November's launch of the January 2022 bond, which was one of the worst German debt auctions since the inception of the single currency.
The auction came after data showed that service sector activity in the euro zone contracted for the fourth consecutive month in December, albeit at a slower pace than initially estimated, underlining fears that the financial crisis is creating a drag on growth.
Adding to concerns over the euro zone’s debt woes, bank deposits at the European Central Bank's overnight facility reached a new all-time high of EUR453 billion on Tuesday, underscoring the unwillingness of European lenders to lend to each other.
In the U.K., a report showed that construction sector activity unexpectedly improved in December, extending the period of sustained expansion to 12 months.
Meanwhile, the pound was higher against the euro, with EUR/GBP shedding 0.24% to hit 0.8319.
Also Wednesday, official data showed that the rate of consumer price inflation in the euro zone eased to 2.8% from 3% in December, supporting the view that the European Central Bank could cut rates further to bolster growth.
Later in the day, the U.S. was to release official data on factory orders.