Investing.com - The pound was lower against the U.S. dollar on Wednesday, after official data showed that the U.K. economy entered a recession in the first quarter, but sterling remained supported ahead of as Federal Reserve policy meeting later in the day.
GBP/USD hit 1.6082 during European morning trade, the pair’s lowest since Monday; the pair subsequently consolidated at 1.6102, shedding 0.25%.
Cable was likely to find support at 1.6037, the low of April 20 and resistance at 1.6070, the session high and a five-month high.
The pound retreated from a five-month high against the greenback after official data showed that the U.K.’s gross domestic product contracted by 0.2% in the three months to March after contracting by 0.3% in the fourth quarter, confounding expectations for 0.1% growth.
The report said that first quarter construction output was down by 3%, the biggest drop since the first quarter of 2009, and compared with a drop of 0.2% in the fourth quarter.
Industrial output was 0.4% lower, while output in the U.K. service sector, which comprises more than three quarters of GDP increased by just 0.1%.
Following the release of the data, U.K. Chancellor George Osborne said the economic situation is very difficult but warned that abandoning the government’s deficit reduction plan would make the situation even worse.
Meanwhile, the Fed was expected to reiterate its intent to keep U.S. interest rates near zero through late 2014, but market participants were awaiting any indications that policymakers were considering a third round of quantitative easing measures.
Data on Tuesday showed that U.S. home prices and consumer confidence came in weaker-than-expected, while U.S. home sales fell slightly less-than-expected.
The pound was lower against the euro, with EUR/GBP adding 0.51% to hit 0.8215.
Later Wednesday, the U.K. was to release a report on industrial order expectations, while the U.S. was to publish government data on durable goods orders. The Federal Reserve’s interest rate announcement was to be followed by a press conference with Chairman Ben Bernanke.
GBP/USD hit 1.6082 during European morning trade, the pair’s lowest since Monday; the pair subsequently consolidated at 1.6102, shedding 0.25%.
Cable was likely to find support at 1.6037, the low of April 20 and resistance at 1.6070, the session high and a five-month high.
The pound retreated from a five-month high against the greenback after official data showed that the U.K.’s gross domestic product contracted by 0.2% in the three months to March after contracting by 0.3% in the fourth quarter, confounding expectations for 0.1% growth.
The report said that first quarter construction output was down by 3%, the biggest drop since the first quarter of 2009, and compared with a drop of 0.2% in the fourth quarter.
Industrial output was 0.4% lower, while output in the U.K. service sector, which comprises more than three quarters of GDP increased by just 0.1%.
Following the release of the data, U.K. Chancellor George Osborne said the economic situation is very difficult but warned that abandoning the government’s deficit reduction plan would make the situation even worse.
Meanwhile, the Fed was expected to reiterate its intent to keep U.S. interest rates near zero through late 2014, but market participants were awaiting any indications that policymakers were considering a third round of quantitative easing measures.
Data on Tuesday showed that U.S. home prices and consumer confidence came in weaker-than-expected, while U.S. home sales fell slightly less-than-expected.
The pound was lower against the euro, with EUR/GBP adding 0.51% to hit 0.8215.
Later Wednesday, the U.K. was to release a report on industrial order expectations, while the U.S. was to publish government data on durable goods orders. The Federal Reserve’s interest rate announcement was to be followed by a press conference with Chairman Ben Bernanke.