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Forex - GBP/USD holds steady ahead of final U.S. budget talks

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Investing.com - The pound held steady against the U.S. dollar in holiday-thinned trade on Monday, as investors remained cautious ahead of final U.S. budget negotiations later in the day.

GBP/USD hit 1.6178 during European afternoon trade, the daily high; the pair subsequently consolidated at 1.6168, inching up 0.04%.

Cable was likely to find support at 1.6134, the session low and resistance at 1.6202, the high of December 27.

Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1 unless Democrats and Republicans agree how to cut the deficit.

U.S. President Barack Obama met with congressional leaders at the White House Friday afternoon, but both sides failed to reach an agreement ahead of the looming year-end deadline.

Senate Majority Leader Harry Reid said the Senate would resume sitting on Monday to continue discussions, but there were still significant differences between the two sides.

Sentiment remained mildly supported however, after a report from HSBC released earlier confirmed that manufacturing activity in China expanded at the fastest pace since May 2011 in December. The final version of China's HSBC Purchasing Managers Index rose to 51.5 in December from a final reading of 50.5 in November.

Elsewhere, sterling was higher against the euro with EUR/GBP shedding 0.26%, to hit 0.8157.

Trading volumes were expected to remain thin as many investors already closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.

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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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