Forexpros – The pound extended gains against the U.S. dollar on Tuesday, rising to a seven-day high as upbeat U.S. housing data and hopes of progress in tackling the debt crisis in the euro boosted demand for riskier assets.
GBP/USD hit 1.5694 during U.S. morning trade, the pair’s highest since December 9; the pair subsequently consolidated at 1.5687, surging 1.21%.
Cable was likely to find support at 1.5433, the low of December 15 and resistance at 1.5779, the high of November 30.
Sentiment was boosted after the U.S. Census Bureau said in a report that building permits rose to the highest level since March 2010 last month, while housing starts climbed to a 19-month high.
Sterling found support earlier after German research institute Ifo said its Business Climate Index rose to a seasonally adjusted 107.2 in December from 106.6 the previous month, confounding expectations for a decline to 106.0.
Elsewhere, Spain saw short-term borrowing costs fall sharply as the country’s Treasury sold more than the targeted amount of EUR4.5 billion in an action of three and six-month government bonds earlier.
But investors remained wary after European Central Bank President Mario Draghi reiterated Monday that the bank’s bond purchasing program was temporary and amid sustained fears of mass downgrades in the euro zone.
In the U.K., a report by the Confederation of British Industry said retail sales unexpectedly rose at the fastest rate in seven months in December, but warned that sales were expected to fall sharply again after Christmas.
Sterling was also higher against the euro with EUR/GBP dropping 0.31%, to hit 0.8361.
Also Tuesday, a report by the Nationwide Building Society showed that its index of U.K. consumer confidence recovered from October’s record low last month but remained subdued amid concerns over unemployment and inflation levels.
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