Forexpros – The pound extended gains against the U.S. dollar on Monday after French and German leaders agreed on a joint plan to tackle the euro zone’s debt crisis and following downbeat U.S. data.
GBP/USD hit 1.5696 during U.S. morning trade, the daily high; the pair subsequently consolidated at 1.5696, gaining 0.62%.
The pair was likely to find support at 1.5575, the low of December 2 and resistance at 1.5779, the high of November 30.
After meeting with German Chancellor Angela Merkel earlier, French President Nicolas Sarkozy told reporters that both countries agreed to back automatic penalties for deficit violators, a European monetary fund and monthly summit meetings.
He also said that Franco-German plan is due to be concluded by March 2012.
Market sentiment also strengthened earlier after Italian Prime Minister Mario Monti unveiled a EUR30 billion package of austerity measures, which includes raising taxes and increasing the pension age.
Meanwhile, data showed that service sector activity in the U.S. declined unexpectedly in November, slumping to the lowest level since January 2010.
The Institute of Supply Management said its non-manufacturing purchasing manager’s index fell to 52.0 in November from 52.9 the previous month. Analysts had expected the index to rise to 53.4 in November.
A separate report showed that U.S. factory orders declined more-than-expected in October, falling 0.4% and for the second consecutive month after a 0.1% decline the previous month.
Analysts had expected factory orders to fall 0.3% in October.
Meanwhile, sterling was almost unchanged against the euro with EUR/GBP inching up 0.02%, to hit 0.8588.
In the U.K., a report showed earlier that service sector activity rose unexpectedly in November, advancing for the eleventh successive month although at a modest pace as incoming new business increased at the slowest rate of the year so far.
The services purchasing managers’ index rose to 52.1 after a reading at 51.3 in October. Analysts had expected the PMI to decline to 50.6 in November.
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