The pound weakened against its major counterparts in the European session on Wednesday, as U.S. debt-ceiling impasse, Evergrande's debt crisis and power shortages in China dampened investor sentiment.

Senate Republicans blocked a House plan to suspend the government's borrowing limit, in a major blow to Democratic attempts to avert a possible government shutdown on October 1.

If the debt ceiling is not raised, the U.S. government would default on its obligations as early as mid-October.

Worries about China Evergrande's debt crisis mounted as it faces $47.5 million bond interest payment on its 9.5 percent March 2024 dollar bond, after missing payments last week.

The developer is planning to sell a 9.99 billion yuan stake in Shengjing Bank to settle its financial liabilities with the bank.

Investors continue to worry about surging energy costs due to power shortages in China, which is hurting the country's manufacturing sector and related supply chains.

Data from the Bank of England showed that U.K. mortgage approvals declined to a 13-month low in August.

Mortgage approvals for house purchases fell to 74,453 in August from 75,126 in July. This was the lowest since July 2020.

The pound dropped to 1.2514 against the franc, its weakest level since August 24. If the pound weakens further, 1.235 is possibly seen as its next support level.

The pound dipped to 1.3444 against the greenback, a level unseen since December 2020. The pound may challenge support around the 1.33 mark.

The pound hit a 6-day low of 149.92 against the yen, from Tuesday's close of 150.82. The pound is seen finding support around the 147.00 region.

The pound declined to its lowest level since July 21 against the euro, at 0.8657. The next possible support for the currency is seen around the 0.88 level.

Looking ahead, European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Japan Governor Haruhiko Kuroda and Federal Reserve Chair Jerome Powell will participate in a virtual panel discussion titled "Policy panel" at the ECB Forum on Central Banking at 11:45 am ET.

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