Forexpros – The pound was lower against the U.S. dollar on Tuesday, as markets were jittery ahead of the Federal Reserve’s rate decision later in the day.
GBP/USD hit 1.5546 during U.S. morning trade, the daily low; the pair subsequently consolidated at 1.5548, shedding 0.23%.
Cable was likely to find short term support at 1.5536, Monday’s low and resistance at 1.5663, the high of December 6.
Markets were jittery as concerns over the risk of sovereign rating downgrades across the euro zone persisted after last week’s European Union summit failed to produce concrete plans to resolve the region’s debt crisis.
In the U.S., the Commerce Department said retail sales increased 0.2% after rising by an upwardly revised 0.6% in October, disappointing expectations for a 0.6% gain.
Core retail sales, which exclude automobile sales, rose 0.2% after advancing 0.6% in October. Analysts had expected core retail sales to rise by 0.5% in November.
Market sentiment found support earlier after data showed that the ZEW index of German economic sentiment rose for the first time in ten months in December, confounding expectations for a decline but the report said perceptions of current developments remained on a downward trend.
Also Tuesday, an auction of Spanish government bonds met with solid investor demand, with the Treasury surpassing the targeted amount, selling EUR4.94 billion in 12-month and 18-month bonds.
Sterling was lower against the euro with EUR/GBP declining 0.27%, to hit 0.8437.
Earlier Tuesday, official data showed that U.K. consumer price inflation declined in line with expectations in November, easing to 4.8% year-on-year, supporting the Bank of England’s view that inflation will moderate.
Later in the day, the Federal Reserve was to announce its federal funds rate.
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