Forex - GBP/USD higher, but gains capped by "cliff" worries

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Investing.com - The pound was higher against the U.S. dollar on Friday, but gains were limited as concerns over the outcome of a last round of U.S budget talks scheduled later in the day continued to weigh.

GBP/USD hit 1.6142 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.6138, rising 0.24%.

Cable was likely to find support at 1.6067, Thursday's low and resistance at 1.6202, Thursday's high.

Investors remained cautious as U.S. President Barack Obama was to meet congressional leaders later Friday at the White House for last-minute talks on a "fiscal cliff" deal to avoid automatic tax increases and broad spending cuts that threaten the US economy's recovery.

The meeting comes just four days before the government goes over the so-called fiscal cliff, assuming no deal is reached. Without a deal, the U.S. could fall back into recession and drag much of the world down with it.

Sterling was also higher against the euro with EUR/GBP sliding 0.60%, to hit 0.8172.

Also Friday, Markit research group said that the euro zone's retail purchasing managers' index deteriorated to 44.5 in December from a reading of 45.8 the previous month.

The report came after official data showed that French consumer spending rose 0.2% in November, more than the expected 0.1% increase and following a 0.1% fall the previous month.

Later in the day, the U.S. was to publish data on pending home sales, as well as a report on business conditions in the Chicago area and official data on crude oil stockpiles and natural gas inventories.


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