Forex - GBP/USD hits fresh 7-week lows after Bernanke comments

The pound fell to fresh seven-week lows against the U.S. dollar on Wednesday, after comments by Federal Reserve Chairman Ben Bernanke as expectations for further easing measures by the Bank of England continued to weigh on demand for sterling. 

GBP/USD hit 1.5075during U.S. morning trade, the pair’s lowest since April 4; the pair subsequently consolidated at 1.5061, retreating 0.56%. 

Cable was likely to find support at 1.5032, the low of April 4 and resistance at 1.5172, the session high. 

In prepared testimony to the U.S. Joint Economic Committee in Washington, Bernanke said accommodative monetary policy was providing significant benefits to the economic recovery and reiterated that the bank’s asset purchase program will remain in place for as long as is necessary.

The central bank head said withdrawing monetary stimulus could lead interest rates to rise temporarily, but also carried a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.

Bernanke said that while conditions in the labor market have shown some recent improvement, long-term employment rates have remained at historic highs and consumer inflation has been low. 

The pound weakened earlier, after the Office for National Statistics said U.K. retail sales fell 1.3% in April from March, the largest fall in a year and confounding expectations for a flat reading.

Retail sales rose 0.5% from a year earlier, well below expectations for a 2.0% increase.

Separately, the minutes of the Bank of England’s May meeting showed that three policymakers, including Governor Mervyn King, voted in favor of more easing this month, unchanged from April.

The International Monetary Fund urged Britain’s government to do more to stimulate growth in its annual review of U.K. economic policies on Wednesday, and warned that austerity measures are posing headwinds to growth. 

Sterling remained near one month lows against the euro, with EUR/GBPclimbing 0.55% to 0.8563.

Also Wednesday, a report by the National Association of Realtors said that U.S. existing home sales eased up 0.6% to a seasonally adjusted 4.97 million units in April from March’s revised total of 4.94 million. 

Analysts had expected U.S. existing home sales to rise 1.4% to 4.99 million units in April.