The pound fell against its major counterparts in the European session on Wednesday, as a lack of progress in negotiations on raising the debt limit dampened risk sentiment.

The U.S. Treasury Department has asked federal agencies whether they can make upcoming payments at a later date, the Washington Post reported, citing two people familiar with the matter.

U.S. Treasury Secretary Janet Yellen previously warned lawmakers that a default in early June is "highly likely."

On the economic front, official data showed U.K. consumer price inflation slowed in April, but the core rate accelerated unexpectedly.

The consumer price index registered an annual increase of 8.7 percent in April after a 10.1 percent gain in March. Inflation was forecast to ease to 8.3 percent.

Input price inflation hit its lowest level since February 2021 while factory gate inflation reached the weakest since July 2021.

The pound edged down to 0.8700 against the euro and 1.1169 against the franc, off its early more than 5-month high of 0.8648 and a 6-day high of 1.1240, respectively. Next immediate support for the currency is seen around 0.89 against the euro and 1.10 against the franc.

The pound weakened to near a 5-week low of 1.2364 against the greenback and a 2-day low of 171.22 against the yen, from its early 2-day high of 1.2469 and more than a 7-year high of 172.79, respectively. The pound is seen challenging support around 1.21 against the greenback and 163.00 against the yen.

Federal Open Market Committee (FOMC) will issue minutes from its meeting of May 2-3 in the New York session.

Grafico Cross Sterling vs US Dollar (FX:GBPUSD)

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Grafico Cross Sterling vs US Dollar (FX:GBPUSD)

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