Investing.com - The pound pared losses against the U.S. dollar on Tuesday, pulling back from an 11-day low as positive euro zone data supported demand for riskier assets, while the downgrade of six European countries continued to weigh.
GBP/USD pulled back from 1.5688, the pair’s lowest since January 30, to hit 1.5744 during European afternoon trade, still down 0.14%.
Cable was likely to find support at 1.5653, the low of November 30 and resistance at 1.5796, the high of January 31.
The pound found support after data showed that German economic sentiment improved significantly more-than-expected in February, turning positive for the first time since May 2011.
The ZEW Centre for Economic Research said that its index of German economic sentiment improved to 5.4 in February, compared to January’s reading of minus 21.6. Analysts had expected the index to improve to minus 11.6 in February.
Meanwhile, economic sentiment in the euro zone rose in February to minus 8.1 from minus 32.5 in January. Economists had expected euro zone economic sentiment to improve by 11.4 points to minus 21.1.
But sterling remained under pressure after Moody’s Investors Service cut the debt ratings of six European countries, including Italy, Spain and Portugal, and said it may strip France and the U.K. of their top Aaa ratings, citing the euro zone’s debt crisis.
In the U.K., Bank of England Governor Mervyn King said the bank's Monetary Policy Committee expects inflation to fall back to "around" its 2% target by the end of 2012, although the pace and extent of the fall in inflation remain highly uncertain.
The comments came after official data showed earlier that consumer price inflation in the U.K. rose 3.6% in January, in line with expectations, after a 4.2% rise the previous month.
A separate report showed that U.K. retail prices rose less-than-expected in January, advancing 3.9% after a 4.8% increase the previous month. Analysts had expected retail prices to rise 4.1% in January.
The pound was also lower against the euro with EUR/GBP rising 0.20%, to hit 0.8381.
Later in the day, the U.S. was to release official data on retail sales, as well as reports on import prices and business inventories.
GBP/USD pulled back from 1.5688, the pair’s lowest since January 30, to hit 1.5744 during European afternoon trade, still down 0.14%.
Cable was likely to find support at 1.5653, the low of November 30 and resistance at 1.5796, the high of January 31.
The pound found support after data showed that German economic sentiment improved significantly more-than-expected in February, turning positive for the first time since May 2011.
The ZEW Centre for Economic Research said that its index of German economic sentiment improved to 5.4 in February, compared to January’s reading of minus 21.6. Analysts had expected the index to improve to minus 11.6 in February.
Meanwhile, economic sentiment in the euro zone rose in February to minus 8.1 from minus 32.5 in January. Economists had expected euro zone economic sentiment to improve by 11.4 points to minus 21.1.
But sterling remained under pressure after Moody’s Investors Service cut the debt ratings of six European countries, including Italy, Spain and Portugal, and said it may strip France and the U.K. of their top Aaa ratings, citing the euro zone’s debt crisis.
In the U.K., Bank of England Governor Mervyn King said the bank's Monetary Policy Committee expects inflation to fall back to "around" its 2% target by the end of 2012, although the pace and extent of the fall in inflation remain highly uncertain.
The comments came after official data showed earlier that consumer price inflation in the U.K. rose 3.6% in January, in line with expectations, after a 4.2% rise the previous month.
A separate report showed that U.K. retail prices rose less-than-expected in January, advancing 3.9% after a 4.8% increase the previous month. Analysts had expected retail prices to rise 4.1% in January.
The pound was also lower against the euro with EUR/GBP rising 0.20%, to hit 0.8381.
Later in the day, the U.S. was to release official data on retail sales, as well as reports on import prices and business inventories.