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Forex - GBP/USD extends losses on U.K., E.Z. worries

ForexFeb 14, 2013 10:38AM ET
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Investing.com - The pound extended losses against the U.S. dollar on Thursday, trading close to a seven-month low as concerns over the outllook for growth in the U.K. and the euro zone continued to weigh, despite upbeat U.S. jobless claims data.

GBP/USD hit 1.5483 during U.S. morning trade, the pair's lowest since July 26; the pair subsequently consolidated at 1.5525, slipping 0.13%.

Cable was likely to find support 1.5471, the low of July 26 and resistance at 1.5542, the session high.

Sterling remained under pressure after the Bank of England cut its outlook for growth on Wednesday and said inflation would remain above target until early 2016.

The BoE said that inflation is likely to be at around 2.3% in two years’ time, sharply higher than the 1.8% forecast in November, before falling back below the bank’s 2% target in the first quarter of 2016.

The central bank added that the economy will experience a "slow but sustained recovery" over the next three years and reiterated that it stood ready to provide more stimulus as needed.

Separately, market sentiment weakened broadly after official data showed that the recession in the euro zone deepened in the fourth quarter, with gross domestic product contracting 0.6%, compared to expectations for a 0.4% decline, after a 0.1% contraction in the third quarter.

Germany’s economy, the euro zone’s largest, contracted by 0.6% in the in the fourth quarter, more than expectations for a 0.5% drop on declining exports and investment.

France’s economy also contracted more than forecast, with GDP falling by 0.3%, while Italy’s economy contracted by 0.9%. The worst performing economy in the region was Portugal, which posted a contraction of 1.8% quarter-on-quarter.

Sterling was higher against the euro with EUR/GBP retreating 0.73%, to hit 0.8593.

In the U.S., the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week fell by 27,000 to a seasonally adjusted 341,000, compared to expectations for a decline of 8,000 to 360,000.

Jobless claims for the preceding week were revised up to 368,000 from a previously reported gain of 366,000.

Forex - GBP/USD extends losses on U.K., E.Z. worries

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