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Forex - GBP/USD higher on U.S. fiscal deal

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Investing.com - The pound was higher against the U.S. dollar on Wednesday, as investor confidence was bolstered by an agreement to avert the U.S. fiscal cliff and robust U.K. manufacturing data.

GBP/USD hit 1.6381 during European afternoon trade, the pair's highest since August 30, 2011; the pair subsequently consolidated at 1.6293, gaining 0.31%.

The pair was likely to find support at 1.6309, the session low and resistance at 1.6453, the high of August 30 2011.

Risk appetite sharpened after U.S. lawmakers passed a compromise bill on Tuesday to avoid the fiscal cliff, blocking a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.

However, investors remained cautious over the longer term outlook, with negotiations on raising the U.S. debt ceiling still to come in February.

In the U.K., data showed that manufacturing activity expanded unexpectedly in December, growing at the fastest pace since September 2011.

The Markit manufacturing purchasing managers' index came in at 51.4, from an upwardly revised reading of 49.2 in November. Analysts had expected the manufacturing PMI to remain unchanged.

Sterling was lower against the euro, with EUR/GBP up 0.23% to 0.8139, but was higher against the broadly weaker yen, with GBP/JPY up 0.56% to 141.73.

Later Wednesday the Institute of Supply Management was to produce a report on U.S. manufacturing growth.

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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.


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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