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Forex - GBP/USD almost unchanged, markets eye Spain

Published 05/29/2012, 10:31 AM
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Investing.com - The pound was almost unchanged against the U.S. dollar on Tuesday, as investors remained cautious after the release of U.S. economic reports amid ongoing concerns over the handling of Spain’s financial crisis.

GBP/USD hit 1.5656 during U.S. morning trade, the pair’s lowest since May 25; the pair subsequently consolidated at 1.5681, inching 0.01% higher.

Cable was likely to find support at 1.5629, the low of May 25 and resistance at 1.5743, the high of March 14.

Standard & Poor’s with Case-Shiller said its house price index fell at an annualized rate of 2.6% in March from a year earlier, in line with expectations and declining for the 21st consecutive month.

A separate report by the Conference Board showed that its index of consumer confidence in the U.S. fell unexpectedly to 64.9 in May from 68.7 the previous month, disappointing expectations for a reading of 69.8.

Meanwhile, the pound remained under pressure amid growing concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.

The yield on Spanish 10-year bonds eased back to 6.44% earlier, after hitting 6.50% on Monday, the 2012 high, after the government announced that it was to recapitalize one of the country’s largest commercial lenders Bankia.

Spanish concerns overshadowed an earlier report by the Confederation of British Industry showing that its index of retail sales jumped to 21 in May from minus 6 the previous month, beating expectations for a reading of minus 7 and turning positive for the first time since November 2011.

Elsewhere, the pound was also steady against the euro with EUR/GBP edging down 0.03%, to hit 0.7996.

Also Tuesday, Spain’s Treasury auctioned EUR8.5 billion of six-month bonds at an average yield of 2.10%, a six-month high, up from 1.77% at a similar auction last month.


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