Investing.com - The pound hit two-month highs against the dollar on Tuesday as uncertainty over the Federal Reserve’s plans to unwind its asset purchase program continued to dominate market sentiment.
GBP/USD hit 1.5680 during European morning trade, the highest since June 18; the pair subsequently consolidated at 1.5678, gaining 0.19%.
Cable was likely to find support at 1.5608, Monday’s low and resistance at 1.5722, the high of June 18.
Investors were looking ahead to the minutes of the Fed’s July meeting, due out on Wednesday, for further indications as to when the central bank may start to phase out its USD85 billion-a-month stimulus program.
Expectations that the Fed may begin tapering as soon as next month were boosted after data last week showed that U.S. weekly jobless claims fell to an almost six year low. Fed Chairman Ben Bernanke has said that the decision to start tapering will depend on whether economic data is strong enough.
Demand for the pound continued to be underpinned after better-than-expected data last week on U.K. jobless claims and retail sales boosted the outlook for the economic recovery.
Sterling was slightly lower against the euro, with EUR/GBP inching up 0.09% to 0.8528.
The euro showed little reaction after official data on Tuesday showed that German producer price inflation dipped 0.1% in July from a month earlier and was 0.5% higher on a year-over-year basis.
Economists had forecast a 0.2% month-over-month increase and a 0.7% annual gain.
