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Forex - GBP/USD at 7-week low after U.S. ISM report

Published 09/06/2011, 10:28 AM
Updated 09/06/2011, 10:28 AM

Investing.com – The pound remained down against the U.S. dollar on Tuesday, trading close to a seven-week low after an industry report showed that the U.S. services sector expanded unexpectedly in August.

GBP/USD hit 1.6011 during U.S. morning trade, the pair’s lowest since July 18; the pair subsequently consolidated at 1.6018, shedding 0.61%.

Cable was likely to find support at 1.6004, the low of July 18 and resistance at 1.6185, Monday’s high.

The Institute for Supply Management said its U.S. services index rose to 53.3 last month from 52.7 in July, confounding expectations for a decline to 51.0.

A reading above 50 indicates expansion in the sector.

Earlier in the day, the pound strengthened against the dollar after Switzerland’s central bank intervened in currency markets, broadly lifting the euro, which in turn pulled the pound higher.

The Swiss National Bank set a minimum exchange rate target of 1.20 per euro for the Swiss franc and said it was prepared to defend this level by purchasing foreign currency in unlimited quantities.

The pound later erased gains amid a combination of worries over the debt crisis in the euro zone and fears that the U.S. is slipping back into a recession after data on Friday showed that the world's largest economy failed to create any jobs in August.

The pound was also lower against the euro, with EUR/GBP rising 0.33% to hit 0.8775.

Also Tuesday, concerns over the outlook for the U.K. economy lingered after the British Retail Consortium said that retail sales in the U.K. fell in August as consumers cut back spending on non-essential items, such as homewares and furniture.

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