Investing.com - The pound was higher against the U.S. dollar in
holiday-thinned trade on Monday, but sterling remained under
pressure as concerns over U.S. fiscal policy continued to weigh.
GBP/USD hit 1.6204 during European morning trade, the session high;
the pair subsequently consolidated at 1.6190, adding 0.13%.
Cable was likely to find support at 1.6104, the low of December 14
and resistance at 1.6269, the high of December 18.
Market sentiment remained under pressure as investors continued to
monitor developments surrounding the fiscal cliff in the U.S.,
approximately USD600 billion in automatic tax hikes and spending
cuts due to come into effect on January 1.
Doubts over whether a deal will be reached ahead of the year-end
intensified late Thursday after House Speaker John Boehner pulled
his so-called "Plan B" fiscal cliff option, which called for tax
increases only on Americans earning USD1 million or more per year,
because his Republican colleagues did not support the legislation.
The U.S. House has adjourned for the Christmas holiday, fueling
speculation that policymakers will not be able to avert the fiscal
cliff. Without a deal, the U.S. could fall back into recession and
drag much of the world down with it.
Adding to concerns, Italian Prime Minister Mario Monti tendered his
resignation after only 13 months in office, paving the way for a
highly uncertain national election in February.
Sterling was lower against the euro with EUR/GBP edging 0.11%
higher, to hit 0.8162.
Trading volumes were expected to remain light because many traders
have closed books to lock in profit before the end of the year,
reducing liquidity in the market and increasing the volatility.
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