Forexpros – The pound remained higher against the U.S. dollar on Wednesday, while hopes for a breakthrough on a resolution to the debt crisis in the euro zone faded ahead of this week’s key European Union summit.
GBP/USD hit 1.5722 during U.S. morning trade, a three-day high; the pair subsequently consolidated at 1.5677, gaining 0.50%.
Cable was likely to find support at 1.5594, the session low and resistance at 1.5725, the high of December 2.
Market sentiment was dented after the Wall Street Journal reported that an unnamed senior German official expressed pessimism on the prospect of success at the two-day EU summit, scheduled to begin Thursday.
European leaders are to discuss proposed changes to EU treaties which would allow for greater fiscal integration in the single currency bloc, as well as an enlargement of the bloc’s bailout fund, the European Financial Stability Facility and the permanent structure that will replace it, the European Stability Mechanism.
The pound shrugged off data showing that U.K. manufacturing output posted the largest decline in six months in October, while industrial production also posted the biggest drop since April.
The Office for National Statistics said manufacturing production fell 0.7%, disappointing expectations for a modest 0.1% decline.
On the year, manufacturing output rose 0.3%, significantly below expectations for a 1.4% gain, after rising at a rate of 2.0% in September.
Industrial output fell by 0.7% in October, worse than expectations for a 0.3% decline and was down 1.7% on the year.
The poor data underlined concerns over weakening economic conditions in the U.K. and reinforced expectations the Bank of England may introduce more stimulus into the economy to shore up growth.
The pound was also higher against the euro, with EUR/GBP shedding 0.58% to hit 0.8540.
Also Wednesday, U.K. Chancellor George Osborne said the debt crisis in the euro zone posed the biggest downside risk to the outlook for economic growth.
Forexpros
