Forex News: Pound Drops As European Shares Traded Lower On

Pound Drops As European Shares Traded Lower On U.S. Debt Ceiling Worries

(RTTNews) - The British pound came under pressure against other major currencies in the European session on Wednesday, as investors parse the latest Fed officials' comments and await news on the U.S. debt ceiling negotiations.

Cleveland Fed President Loretta Mester said on Tuesday that she doesn't think the central bank can hold interest rates steady yet.

However, comments from Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic suggested they were leaning toward holding interest rates steady at the central bank's June 13-14 meeting.

Dallas Fed President Lorie Logan noted that a slower pace of tightening doesn't diminish commitment to achieving inflation goals.

New York Fed President John Williams indicated that he was comfortable with current market expectations of no increase at the June meeting.

President Joe Biden cut short his planned Asia trip to return to Washington and House Speaker Kevin McCarthy offered a somewhat upbeat assessment on the second round of debt-ceiling talks, suggesting that an agreement is possible by the end of the week.

However, the traders focus on the Bank of England Governor Andrew Bailey's speech at the British Chambers of Commerce Global Annual Conference, in London, due later in the day.

In the Asian session, the sterling held steady against its major rivals.

In the European trading, the pound fell to a 3-week low of 1.2421 against the U.S. dollar, from an early high of 1.2494. The sterling may find support around the 1.22 area.

Against the euro and the Swiss franc, the pound dropped to 5-day lows of 0.8721 and 1.1159 from early highs of 0.8689 and 1.1193, respectively. If the pound extends its downtrend, it is likely to find support around 1.22 against the greenback, 0.88 against the euro and 1.10 against the franc.

Moving from an early high of 170.60 against the yen, the pound edged down to 170.11. The next possible support level for the pound is seen around the 165.00 area.

Looking ahead, Eurozone inflation data for April is due to be released at 5:00 am ET.

At the same time, ECB board member Frank Elderson will participate in a focus panel 18 "Beyond GDP indicators" at Beyond Growth Conference 2023, in Frankfurt, Germany.

Half-an-hour later, ECB board member Fabio Panetta, will do a presentation during online debate on the digital euro at Kangaroo Group event, in Frankfurt, Germany.

In the New York session, U.S. building permits for April, housing starts data for April and U.S. EIA crude oil data are slated for release.

At 11:15 am ET, ECB Vice President Luis de Guindos will deliver a closing speech at 18th IESE Banking Industry Meeting "Banking Navigating the Wave of Inflation" in Madrid.

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