Forexpros – The pound extended gains against the U.S. dollar on Tuesday, tracking the euro higher as market sentiment continued to strengthen after better-than-expected U.S. manufacturing data.
GBP/USD hit 1.5624 during U.S. morning trade, the pair’s highest since December 28; the pair subsequently consolidated at 1.5603, climbing 0.59%.
Cable was likely to find support at 1.5467, Monday’s low and resistance at 1.5691, the high of December 28.
Data showed that manufacturing activity in the U.S. rose more-than-expected in December, expanding at the highest rate since June.
In a report, the Institute for Supply Management said its index of purchasing managers rose to 53.9 in December from 52.7 the previous month. Analysts had expected the ISM PMI to ease up to 53.2 in December.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Sentiment was also boosted after data showed that Chinese manufacturing activity returned to expansionary territory last month after contracting in November, easing concerns over a slowdown in the world’s second largest economy.
But investors remained cautious as the threat of sovereign debt downgrades across the euro zone lingered, while markets eyed bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.
Elsewhere, the pound was lower against the euro with EUR/GBP advancing 0.33%, to hit 0.8366.
Earlier Tuesday, a report showed that U.K. manufacturing activity unexpectedly improved in December, but remained in contraction territory for the third consecutive month.
Markit said its manufacturing purchasing managers’ index rose to a seasonally adjusted 49.6 in December from an upwardly revised 47.7 the previous month.
Later in the day, the Federal Reserve was to publish the minutes of its December policy meeting.
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