Investing.com - The pound remained higher against the U.S. dollar on Wednesday, trading close to a 4-day high as expectations for additional stimulus measures by the Federal Reserve weighed on the greenback, while worries over the ongoing debt crisis in the euro zone lingered.
GBP/USD hit 1.5578 during U.S. morning trade, the pair’s highest since July 5; the pair subsequently consolidated at 1.5571, rising 0.34%.
Cable was likely to find support at 1.5477, Tuesday’s low and resistance at 1.5641, the high of June 27.
Investors were eyeing the minutes of the Fed’s June policy meeting after official data showed earlier that the U.S. trade deficit narrowed to a seasonally adjusted USD48.7 billion in May from deficit of USD50.6 billion in April.
Analysts had expected the U.S. trade deficit to narrow to USD48.5 billion.
Meanwhile, market sentiment remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Elsewhere, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Sterling was trading close to a fresh three-and-a-half year high against the euro with EUR/GBP edging down 0.08%, to hit 0.7888.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.
GBP/USD hit 1.5578 during U.S. morning trade, the pair’s highest since July 5; the pair subsequently consolidated at 1.5571, rising 0.34%.
Cable was likely to find support at 1.5477, Tuesday’s low and resistance at 1.5641, the high of June 27.
Investors were eyeing the minutes of the Fed’s June policy meeting after official data showed earlier that the U.S. trade deficit narrowed to a seasonally adjusted USD48.7 billion in May from deficit of USD50.6 billion in April.
Analysts had expected the U.S. trade deficit to narrow to USD48.5 billion.
Meanwhile, market sentiment remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Elsewhere, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Sterling was trading close to a fresh three-and-a-half year high against the euro with EUR/GBP edging down 0.08%, to hit 0.7888.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.