Pound falls to fresh lows ahead of summer budget 2015

The pound fell to a new one-month low against the dollar and a multi-week low versus the euro as the market awaited the summer budget for 2015.

Growing optimism that eurozone authorities will try to avert the exit of Greece from the currency union has broadly helped the single currency, which has made stronger gains against the pound thanks to the budget concerns in the UK.

The GBP/USD fell to 1.5392, its lowest since 10 June, and 0.44% down on the day. Wednesday's (8 July) drop added to the 0.92% slide on Tuesday.

The EUR/GBP rose 0.5% on the day to 0.7189, its highest since 22 June. The cross had touched an eight-year low of 0.6989 on 29 June, from where the sterling has weakened 2.8%.

After the budget is published, the market focus will shift to the FOMC minutes, due at 6:00 pm. Fresh cues from US policymakers will be keenly watched for the likely timing of the first US rate hike after several years.

Technically, the GBP/USD has just hit a support line, which is endorsed by the 61.8% Fibonacci retracement of the April-June rally. A break of that will open doors to a region of 1.5247-1.5170 made by the 50% line on the top and the 1 June low on the bottom.

Further south, the pair will have levels like 1.5085 and 1.4884 ahead of a retest of the multi-year of 1.4566 touched in April.

On the higher side, 1.5600 is the first main resistance ahead of 1.5820. A break of that will take the pair for a retest of the 18 June high of 1.5930, which was a seven-month high.