Pound Weakens As European Stocks Drop On China Worries

The pound declined against its most major counterparts in the European session on Monday, as COVID protests in several major cities in China dragged down European shares.

Clashes were reported in Beijing, Shanghai and other parts of China, amid discontent over the government's zero-COVID policy.

In Shanghai, police used pepper spray against protesters demanding Xi to quit or to the ruling party to relinquish power.

Stocks and oil fell sharply as investors fear that tighter restrictions and protests could hurt China's economic growth.

China's virus cases touched a new record high for the fifth straight day, reaching 40,052.

The pound fell against the yen, hitting a 1-week low of 166.27. The pound may challenge support around the 165.00 mark.

The pound touched a 4-day low of 1.1382 against the franc and a 5-day low of 0.8676 against the euro, down from its prior highs of 1.1435 and 0.8585, respectively. The next possible support for the pound is seen around 1.12 against the franc and 0.88 against the euro.

In contrast, the pound rebounded to 1.2118 against the greenback, from a 5-day low of 1.2025 seen at 9:05 pm ET. If the currency rises further, 1.26 is possibly seen as its next resistance level.