Investing.com - The pound trimmed losses against the U.S. dollar on Tuesday, pulling away from six-month lows after remarks by European Central Bank President Mario Draghi, although U.K. growth concerns continued to weigh demand for sterling.
GBP/USD pulled away from 1.5573, the pair’s lowest since August 8, to hit 1.5619 during U.S. morning trade, still down 0.25%.
Cable was likely to find support at 1.5489, the low of August 2 and resistance at 1.5667, the session high.
Sentiment improved after Draghi said Spain was on the right track, following an address to the Spanish Parliament to talk about the central bank’s Outright Monetary Transactions scheme. He added that Spain's banks were today properly capitalized and in a position to give credit.
Draghi also said that the ECB was aware that exchange rates are as important for growth as for price stability.
Earlier Tuesday, the G7 reaffirmed its commitment to market determined exchange rates, saying that countries will not target exchange rates and warned that excessive volatility can have “adverse implications” for economic and financial stability.
In the U.K., the Office for National Statistics earlier said the rate of consumer inflation remained unchanged at 2.7% in January, slightly better than expectations for an increase to 2.8%.
Consumer prices fell 0.5% last month, compared to expectations for a 0.4% decline, after rising by 0.5% in December.
Core CPI, which excludes food, energy, alcohol, and tobacco costs eased to a seasonally adjusted 2.3% in January from 2.4% the previous month.
The data came after the BoE warned last week that inflation may remain above its 2% target until 2015. The central bank was to publish its quarterly inflation report on Wednesday and was widely expected to cut its forecast for growth.
Sterling was also lower against the euro with EUR/GBP climbing 0.53%, to hit 0.8605.
Later in the day, the European Economic and Financial Affairs Council was holding talks in Brussels.
Market participants were also awaiting U.S. President Barack Obama's State of the Union speech later Tuesday for any indications of an agreement to avert automatic tax hikes and spending cuts due to take effect on March 1.
GBP/USD pulled away from 1.5573, the pair’s lowest since August 8, to hit 1.5619 during U.S. morning trade, still down 0.25%.
Cable was likely to find support at 1.5489, the low of August 2 and resistance at 1.5667, the session high.
Sentiment improved after Draghi said Spain was on the right track, following an address to the Spanish Parliament to talk about the central bank’s Outright Monetary Transactions scheme. He added that Spain's banks were today properly capitalized and in a position to give credit.
Draghi also said that the ECB was aware that exchange rates are as important for growth as for price stability.
Earlier Tuesday, the G7 reaffirmed its commitment to market determined exchange rates, saying that countries will not target exchange rates and warned that excessive volatility can have “adverse implications” for economic and financial stability.
In the U.K., the Office for National Statistics earlier said the rate of consumer inflation remained unchanged at 2.7% in January, slightly better than expectations for an increase to 2.8%.
Consumer prices fell 0.5% last month, compared to expectations for a 0.4% decline, after rising by 0.5% in December.
Core CPI, which excludes food, energy, alcohol, and tobacco costs eased to a seasonally adjusted 2.3% in January from 2.4% the previous month.
The data came after the BoE warned last week that inflation may remain above its 2% target until 2015. The central bank was to publish its quarterly inflation report on Wednesday and was widely expected to cut its forecast for growth.
Sterling was also lower against the euro with EUR/GBP climbing 0.53%, to hit 0.8605.
Later in the day, the European Economic and Financial Affairs Council was holding talks in Brussels.
Market participants were also awaiting U.S. President Barack Obama's State of the Union speech later Tuesday for any indications of an agreement to avert automatic tax hikes and spending cuts due to take effect on March 1.