Forex - GBP/USD pares gains, E.Z. worries persist

[Rey Nuevo]

Forexpros - The pound pared gains against the U.S. dollar on Monday, as investors remained concerned over the handling of the debt crisis in the euro zone, although news of a Spanish bailout continued to support demand for risk-related assets.

 

GBP/USD pulled back from 1.5582, the pair’s highest since June 7, to hit 1.5526 during European afternoon trade, still up 0.35%.

 

Cable was likely to find support at 1.5474, the low of May 30 and resistance at 1.5599, the high of June 7.

 

The pound rose to a two-day high against the greenback earlier, after Spain’s Finance Minister Luis de Guindos said the European Union will grant Spain a loan of up to EUR100 billion that the government will use to recapitalize the country’s ailing banking sector.

 

But investors remained cautious as details of the Spanish bailout agreement remained unclear, with the exact amount Spain is to receive still to be decided, after the results of independent banking audits are published later this month.

 

Meanwhile, uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, also weighed.

 

Markets shrugged off official data showing that Chinese inflation, industrial output and retail sales disappointed expectations in May, after unexpectedly strong import data eased concerns over a ‘hard landing’ in the world’s second largest economy.

 

Elsewhere, sterling was higher against the euro with EUR/GBP falling 0.24%, to hit 0.8071.

 

Also Monday, official data showed that industrial production in France rose far more-than-expected April, jumping 1.5% after a 1% decline the previous month. Analysts had expected industrial production to rise 0.1% in April.