The pound fell to session lows against the U.S. dollar on Monday, as uncertainty over possible changes to Britain’s relationship with the European Union weighed on demand for sterling. GBP/USD hit 1.6040 during European afternoon trade, the pair’s lowest since Thursday; the pair subsequently consolidated at 1.6053, shedding 0.48%. Cable was likely to find support at 1.5991, the low of January 9 and a five-week low and resistance at 1.6153, the session high. The pound weakened broadly as pressure on the government to renegotiate the terms of its EU membership mounted. Earlier Monday, British Prime Minister David Cameron played down speculation over a referendum on whether Britain should leave the EU and insisted that he wants Britain to remain in the EU. Sentiment on sterling also remained fragile after a recent string of weak economic data fuelled concerns that the economy slid back into a recession in the fourth quarter. The pound was trading close to nine-month highs against the euro, with EUR/GBP up 0.50% to 0.8312. Investors were looking ahead to a speech by Federal Reserve Chairman Ben Bernanke on monetary policy later in the trading day, amid speculation that the Fed chief would quash speculation over an earlier-than-expected end to the central bank’s quantitative easing program.
EasyForexNews Research Team