Forex - GBP/USD hits session lows after U.K. GDP data

The pound fell to session lows against the dollar on Wednesday after official data confirmed that the U.K. economy contracted in the fourth quarter, while annualized growth was revised lower.

GBP/USD hit 1.5120 during European morning trade, the pair’s lowest since March 21; the pair subsequently consolidated at 1.5131, shedding 0.19%.

Cable was likely to find support at 1.5072, the low of March 19 and resistance at 1.5206, Tuesday’s high.

The Office for National Statistics said U.K. gross domestic product contracted by 0.3% in the three months to December, in line with preliminary estimates and economists’ forecasts. 

The ONS said fourth quarter growth for 2012 was revised down to 0.2% compared to the same period the previous year, from a preliminary estimate for 0.3% growth.  

The report said a number of unusual factors may have impacted on growth in 2012. 

Bad weather and the loss of a working day due to the Diamond Jubilee may have reduced output during the second quarter. In contrast, the London 2012 Olympic and Paralympic Games in the third quarter supported output, and this may have been partly responsible the contraction in the fourth quarter.

Sterling was higher against the euro, with EUR/GBP down 0.26% to 0.8461.

The euro remained under pressure amid a combination of concerns over the financial stability of the euro zone following Cyprus’s last minute bailout and ongoing political uncertainty in Italy.

Investors remained concerned that the bailout deal for Cyprus could set a precedent for future bailouts in larger euro zone states, with big bank depositors and senior bond holders forced to suffer losses.

Italy was to hold an auction of 10-year government bonds later Wednesday, while the U.S was to release private sector data on pending home sales.

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