Forexpros – The pound extended gains against the U.S. dollar on Tuesday, as risk sentiment improved although concerns over the financial crisis in the euro zone persisted.
GBP/USD hit 1.5624 during European afternoon trade, the pair’s highest since December 28; the pair subsequently consolidated at 1.5608, climbing 0.62%.
Cable was likely to find support at 1.5467, the low of January 2 and resistance at 1.5691, the high of December 28.
Risk sentiment was boosted after data showed that Chinese manufacturing activity returned to expansionary territory last month after contracting in November, easing concerns over a slowdown in the world’s second largest economy.
In the U.K., a report showed that manufacturing activity unexpectedly improved in December, but remained in contraction territory for the third consecutive month.
Markit said its manufacturing purchasing managers’ index rose to a seasonally adjusted 49.6 in December from an upwardly revised 47.7 the previous month.
Analysts had expected the manufacturing PMI to ease down to 47.3.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Meanwhile, investors remained cautious amid fears over the risk of sovereign debt downgrades across the euro zone, as investors looked ahead to bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.
Elsewhere, the pound was lower against the euro with EUR/GBP adding 0.13%, to hit 0.8349.
Later in the day, the U.S. Institute of Supply Management was to publish a report on manufacturing activity and the Federal Reserve was to publish the minutes of its December policy meeting.
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