Forex - GBP/USD remains lower as E.Z. worries dominate

Published 11/09/2012, 10:35 AM
Updated 11/09/2012, 10:36 AM
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Investing.com - The pound remained lower against the U.S. dollar on Friday, as concerns over the worsening of the debt crisis in the euro overshadowed data showing that consumer sentiment in the U.S. rose to a five-year high in November.

GBP/USD hit 1.5905 during U.S. morning trade, the pair's lowest since September 6; the pair subsequently consolidated at 1.5924, shedding 0.38%.

Cable was likely to find support at 1.5882, the low of September 6 and resistance at 1.6020, the session high.

In a preliminary report, the University of Michigan said that its index of consumer sentiment improved more-than-expected in November, rising to 84.9 from a reading of 82.6 the previous month.

Analysts had expected the index to rise to 83.0 in November.

But risk sentiment remained under pressure after Germany's Economy Ministry said that growth was likely to slow in the fourth quarter and the first three months of 2013, while the French central bank said it expected the euro zone's second-largest economy to slip into recession towards the end of 2012.

Investors were also eyeing a Greek parliament vote on Sunday on its 2013 budget. The budget must be passed to unlock a further tranche of international aid.

On Thursday, German Finance Minister Wolfgang Schaeuble said next week may still be too early to make a decision on granting further aid to Athens, despite a successful vote on new austerity measures.

Markets were also jittery amid concerns over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1 unless lawmakers can reach an agreement, which could threaten U.S. and global growth.

Elsewhere, sterling was lower against the euro with EUR/GBP adding 0.13%, to hit 0.7985.

Also Friday, official data showed that the U.K. trade deficit narrowed more-than-expected in September, hitting GBP8.4 billion from a deficit of GBP10 billion the previous month.

Analysts had expected the trade deficit to narrow to GBP8.9 billion in September.


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