Forexpros – The pound was higher against the U.S. dollar in thin post-Christmas trade on Tuesday, as markets eyed Italian bond auctions later in the week but gains were capped by sustained concerns over the euro zone’s debt woes.
GBP/USD hit 1.5680 during U.S. morning trade, the pair’s highest since December 23; the pair subsequently consolidated at 1.5668, advancing 0.23%.
Cable was likely to find support at 1.5579, the low of December 23 and resistance at 1.5728, the high of December 22.
With markets in the U.K. remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were low, resulting in subdued trade.
Investors were jittery as the yield on Italian ten-year bonds rose earlier above the 7% threshold, a level widely considered to be unsustainable.
Italy’s Treasury was set to sell EUR9 billion of 179-day bills and EUR 2.5 billion of zero-coupon 2013 bonds on Wednesday.
Sentiment also weakened after data showed the use of the European Central Bank’s overnight deposit facility reached an all-time high on Monday, adding to speculation that the central bank’s three-year loan operation last week did little to strengthen the region’s banking sector.
Meanwhile, data showed that U.S. consumer confidence rose more-than-expected in December, climbing to the highest level since April.
In a report, the Conference Board said that its index of consumer confidence rose to 64.5 in December from a reading of 55.2 the previous month. Analysts had expected the index to rise to 58.2 in December.
A separate report showed that the U.S. S&P/Case-Shiller home price index fell more-than-expected in October, declining for the 16th consecutive month.
Elsewhere, sterling was higher against the euro with EUR/GBP shedding 0.16%, to hit 0.8340.
Earlier Tuesday, the Telegraph reported that the U.K. is considering plans to restrict the flow of money in and out of the country, in order to protect the economy in the event of a full-blown break-up of the single currency bloc.
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