Forex - GBP/USD hits fresh 2-1/2 month high, focus on U.S. budget talks

Shutterstock photo - The pound edged up to a fresh two-and-a-half month high against the U.S. dollar on Tuesday, as hopes that U.S. budget negociations will succeed before the end of the week continued to support market sentiment.

GBP/USD hit 1.6226 during U.S. morning trade, the pair's highest since September 28; the pair subsequently consolidated at 1.6233, adding 0.18%.

Cable was likely to find support at 1.6156, Monday's low and resistance at 1.6271, the high of September 28.

Market sentiment was supported by hopes that an agreement to avoid the U.S. fiscal cliff can be reached ahead of the January 1 deadline.

Negotiations aimed at avoiding the automatic tax hikes and spending cuts which investors fear could derail the U.S. recovery, have intensified in recent days, raising hopes that U.S. lawmakers will reach an agreement by the end of the year.

Sterling also remained supported after the Office for National Statistics said that the annual rate of consumer price inflation in the U.K. held steady at 2.7% in November after an unexpected increase in October, compared to expectations for a dip to 2.6%.

Month-over-month, consumer price inflation rose 0.2%, in line with expectations, after rising 0.5% in October.

Core CPI, which excludes food, energy, alcohol, and tobacco costs held steady at a seasonally adjusted 2.6% in November, unchanged from October and confounding expectations for a slight increase to 2.7%.

Elsewhere, the pound was steady against the euro with EUR/GBP inching down 0.04%, to hit 0.8120.

Also Tuesday, the U.S. Bureau of Economic Analysis said the country's current account deficit narrowed to a seasonally adjusted USD10753 billion in the third quarter, from a revised deficit of USD118.1 billion, posting the smallest deficit since the fourth quarter of 2010.

Analysts had expected the U.S. current account deficit to narrow to USD103.4 billion in the third quarter. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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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