Forexpros – The pound held gains against the U.S. dollar on Tuesday, as demand for riskier assets was boosted by hopes for action to tackle the debt crisis in the euro zone, while better-than-forecast U.K. data also supported sterling.
GBP/USD hit 1.5657 during U.S. morning trade, the pair’s highest since August 2; the pair subsequently consolidated at 1.5653, gaining 0.33%.
Cable was likely to find support at 1.5563, the session low and resistance at 1.5729, the high of July 31.
The pound pushed higher against the dollar and the euro following data showing that U.K. industrial output suffered its biggest monthly fall since November 2008 in June, dropping 2.5%, but came in better than forecasts for a 3.4% slump.
Manufacturing output in the U.K. contracted 2.9% in June, but was still better than expectations for a 4.1% decline.
Market sentiment continued to be supported by expectations that the ECB will soon take steps to help lower Spanish and Italian borrowing costs after ECB head Mario Draghi indicated last week that the bank may restart its bond buying program.
Draghi said that any steps by the bank were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Earlier Tuesday, a raft of weak euro zone data underlined concerns over the impact of the long running debt crisis on the outlook for growth in the region.
German factory orders tumbled 1.7% in June, almost twice as much as expectations for a 1.0% decline.
A separate report showed that Italian gross domestic product contracted by 0.7% in the second quarter, slightly worse than expectations for a 0.6% contraction.
Sterling was higher against the euro, with EUR/GBP down 0.19% to 0.7932.
Later in the day, Federal Reserve Chairman Ben Bernanke was to speak at an event in Washington DC.
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