Forex - GBP/USD steady near 3-week lows

FTS- Forex Trading: The pound was steady close to three-week lows against the dollar on Monday as demand for the dollar continued to be underpinned by expectations that the Federal Reserve will soon start to taper bond purchases.

GBP/USD hit 1.5344 during European afternoon trade, the pair’s lowest since June 5; the pair subsequently consolidated at 1.5368, shedding 0.34%.

Cable was likely to find support at 1.5290, the low of June 5 and resistance at 1.5398, the session high.

The dollar remained broadly stronger after Fed Chairman Ben Bernanke said Wednesday the bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy continues to pick up.

Sterling slipped lower against the euro, with EUR/GBP easing up 0.11% to 0.8517.

Sentiment on the euro remained fragile as peripheral euro zone bond yields continued to grind higher amid concerns over the prospect of an end to the Fed’s stimulus program.

The yield on Spanish 10-year bonds rose to 5% for the first time since early April on Monday, up from 4.88% on Friday. Meanwhile, the yield on Italian 10-year bonds climbed to 4.71% from 4.58% on Friday.

Separately, a report showed that German business confidence strengthened modestly in June.

The German research institute, Ifo said its Business Climate Index rose to a seasonally adjusted 105.9 in June from a reading of 105.7 in May, in line with market expectations.

Also Monday, Greek political leaders were holding talks to discuss a cabinet reshuffle after the Democratic Left party withdrew from the coalition government on Friday in protest over its decision to shut down the state broadcaster, leaving the government with only a slim majority in parliament.