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Forex - GBP/USD holds gains as U.K. data supports

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Investing.com - The pound held gains against the U.S. dollar on Thursday, as upbeat U.K. data supported demand for sterling, while investors continued to focus on developments in Cyprus and Italy.

GBP/USD hit 1.5180 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.5176, gaining 0.31%.

Cable was likely to find support at 1.5093, the low of March 21 and resistance at 1.5258, the high of March 25.

The pound hit session highs against the dollar earlier after data showing that the U.K. services sector grew at the strongest pace in five months in January eased concerns over the risk of a recession.

The Office for National Statistics said U.K. service output rose 0.3% in January, the biggest rise since August, bringing the annualized rate of output to 0.8%.

The report eased concerns over prospects for a triple-dip recession after previous economic data showed that U.K. manufacturing output fell at the fastest rate in six months in January.

Meanwhile, safe haven demand continued to be underpinned as banks in Cyprus reopened for the first time in almost two weeks, with capital controls in place to prevent a run on banks.

Separately, Italy saw borrowing costs rise amid growing doubts over whether a stable coalition government can be formed amid an ongoing political deadlock.

Sterling was lower against the euro with EUR/GBP adding 0.09%, to hit 0.8455.

In the U.S., data showed that the Chicago purchasing managers' index slid to 52.4 in March, from a reading of 56.8 the previous month, compared to expectations for a decline to 56.5.

The report came after official data showed that the number of people who filed for initial unemployment assistance in the U.S. rose by 16,000 to a seasonally adjusted 357,000 last week, compared to expectations for an increase to 340,000.

A separate report showed that U.S. gross domestic product expanded at an annual rate of 0.4% in the three months to December, lower than forecasts for a 0.5% expansion.

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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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