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Forex - GBP/USD falls to 2-day low on weak U.K. data, Fed eyed

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Forexpros - The pound turned lower against the U.S. dollar on Tuesday, falling to a two-day low after official data showed that manufacturing production declined unexpectedly in June, while investors awaited a Federal Reserve statement on monetary policy.

GBP/USD hit 1.6266 during U.S. morning trade, the lowest since August 5; the pair subsequently consolidated at 1.6294, slipping 0.15%.

Cable was likely to find short-term support at 1.6227, the low of August 5 and resistance at 1.6475, Monday's high.

Earlier in the day, official data showed that manufacturing production in the U.K. fell by 0.4% in June, confounding expectations for a 0.2% gain. Manufacturing production rose by 1.8% in May.

Year-on-year, manufacturing production rose at an annualized rate of 2.1%, below expectations for a 2.8% gain.

Industrial production was flat in June, below expectations for a 0.4% increase. The previous month's figure was revised down to 0.8% from 0.9%.

A separate report showed that the U.K.'s goods trade deficit widened unexpectedly to GBP8.9 billion in June, compared to a deficit of GBP8.5 billion in May. Economists had expected the goods trade deficit to narrow to GBP8.2 billion in June.

Meanwhile, investors awaited a Federal Reserve statement on monetary policy due later in the day, which could provide hints regarding further easing.

With financial markets in turmoil, expectations grew that the central bank would introduce further easing to calm investors and stimulate growth in the world's largest economy after it completed a USD600 billion Treasury bond-buying program known as Quantitative Easing 2 on June 30.

Elsewhere, the pound was also down against the euro, with EUR/GBP advancing 0.69% to hit 0.8748.

Earlier Tuesday, government data showed that U.S. non-farm productivity declined 0.3% in the second quarter, while unit labor costs rose 2.2%, broadly in line with expectations.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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