Forexpros – The pound was higher against the U.S. dollar in thin trade on Tuesday, amid reports the U.K. is preparing to deal with a potential disintegration of the euro zone, while concerns over downgrades in the region persisted.
GBP/USD hit 1.5676 during European morning trade, the pair’s highest since December 23; the pair subsequently consolidated at 1.5659, adding 0.17%.
Cable was likely to find support at 1.5579, the low of December 23 and resistance at 1.5728, the high of December 22.
Trading volumes were low, resulting in subdued trade as many investors were already away on year-end leave, resulting in subdued trade.
According to the Telegraph, the U.K. Treasury 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.
Meanwhile, sentiment remained supported amid hopes of economic recovery in the U.S. Government data showed Friday that U.S. new home sales rose to a seven-month high in November, while durable goods orders rose a better-than-expected 3.8% in November from October.
Both reports came amid a week marked by bullish U.S. economic indicators, including a report showing that initial jobless claims fell to the lowest level since April 2008.
But markets were jittery as ratings agency Standard & Poor’s had yet to announce if it will cut ratings on any of the 15 countries it has on credit watch negative.
Elsewhere, the pound was higher against the euro with EUR/GBP retreating 0.10%, to hit 0.8345.
Markets in the U.K. were to remain closed for a post-Christmas bank holiday.
Later in the day, the U.S. was to publish industry data on house price inflation, as well as a report on consumer confidence and manufacturing activity in Richmond.
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