Investing.com - The pound was down sharply against the U.S. dollar on Wednesday, as selling in thin trade conditions resulted in exaggerated moves to the downside amid ongoing concerns over the debt crisis in the euro zone.
GBP/USD hit 1.5492 during U.S. morning trade, the lowest since December 20; the pair subsequently consolidated at 1.5496, tumbling 1.11%.
Cable was likely to find support at 1.5464, the low of December 19 and resistance at 1.5700, the previous day’s high.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Italy’s Treasury sold EUR9 billion of six-month bills, at an average yield of 3.25%, down from a record-high 6.50% in a previous auction in November. The country also sold EUR1.73 billion of two-year zero-coupons at a 5% yield.
Following the auction, the yield on Italy’s 10-year bonds eased below the 7% threshold widely seen as unsustainable in the long-term before creeping back higher.
Despite the upbeat results, Thursday’s sale of EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 was seen as a bigger test of market confidence in the country’s sovereign debt.
Adding to concerns, data released earlier showed that the use of the European Central Bank's overnight deposit facility reached a new, all-time high of EUR452.03 billion on Tuesday.
The figure topped the previous record of EUR411.8 billion set on Tuesday. Heavy use of the deposit facility is seen as a sign of stress in the banking system, reflecting reluctance by banks to lend to each other.
The report added to speculation that the central bank’s three-year loan operation last week did little to strengthen the region’s banking sector.
Meanwhile, the broadly weaker was also down against the euro with EUR/GBP gaining 0.4% to trade at 0.8374.
No major U.S. economic data was due for release Wednesday, while reports set for release during Thursday’s trading session include the latest estimate of weekly jobless claims, a December purchasing-managers index for the Chicago region and November home sales.
GBP/USD hit 1.5492 during U.S. morning trade, the lowest since December 20; the pair subsequently consolidated at 1.5496, tumbling 1.11%.
Cable was likely to find support at 1.5464, the low of December 19 and resistance at 1.5700, the previous day’s high.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Italy’s Treasury sold EUR9 billion of six-month bills, at an average yield of 3.25%, down from a record-high 6.50% in a previous auction in November. The country also sold EUR1.73 billion of two-year zero-coupons at a 5% yield.
Following the auction, the yield on Italy’s 10-year bonds eased below the 7% threshold widely seen as unsustainable in the long-term before creeping back higher.
Despite the upbeat results, Thursday’s sale of EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 was seen as a bigger test of market confidence in the country’s sovereign debt.
Adding to concerns, data released earlier showed that the use of the European Central Bank's overnight deposit facility reached a new, all-time high of EUR452.03 billion on Tuesday.
The figure topped the previous record of EUR411.8 billion set on Tuesday. Heavy use of the deposit facility is seen as a sign of stress in the banking system, reflecting reluctance by banks to lend to each other.
The report added to speculation that the central bank’s three-year loan operation last week did little to strengthen the region’s banking sector.
Meanwhile, the broadly weaker was also down against the euro with EUR/GBP gaining 0.4% to trade at 0.8374.
No major U.S. economic data was due for release Wednesday, while reports set for release during Thursday’s trading session include the latest estimate of weekly jobless claims, a December purchasing-managers index for the Chicago region and November home sales.