Investing.com - The pound was almost unchanged against the dollar on Tuesday, after rising to two-and-a-half month highs earlier in the session as unexpectedly strong U.K. inflation data added to the view that the Bank of England may hold off on further monetary easing in the near term.
GBP/USD hit 1.6226 during European afternoon trade, the pair's highest since September 28; the pair subsequently consolidated at 1.6205, inching up 0.01%.
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 hit session highs 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%.
The pound was slightly lower against the euro, with EUR/GBP easing up 0.12% to 0.8133.
Also Tuesday, the ONS said producer price inflation input in the U.K. inched up 0.1% in November, compared to expectations for a 0.1% decline.
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