Investing.com - The pound erased gains against the dollar on Tuesday after data showed that British factory orders fell in January, but losses were limited as growth in new manufacturing orders was the strongest since April 2011.
GBP/USD retreated from session highs of 1.6452 to trade at 1.6418, dipping 0.05%.
Cable was likely to find support at 1.6350 and resistance at 1.6500.
The Confederation of British Industry said its index of industrial order expectations fell to -2 this month from 12 in December, and below expectations of a reading of 10.
However, the CBI said the volume of total orders for the next three months rose to 22 from 14, the highest level since April 2012. New orders in the three months to January saw their strongest growth in nearly three years.
The data also showed that the quarterly business outlook balance ticked down to 21 in the three months to January from 24 in the three months to October, which had been its highest since April 2010.
Demand for the dollar continued to be underpinned by expectations for a reduction to the Federal Reserve’s quantitative easing program at the outcome of its next policy meeting on January 29 to USD65 billion from the current USD75 billion.
The euro pulled back from one-year lows against sterling following the release of the data, with EUR/GBP down 0.13% to 0.8238, up from lows of 0.8226.
Earlier Tuesday, the ZEW Centre for Economic Research said its index of German economic sentiment ticked down to 61.7 this month from 62.0 in December. Analysts had expected an increase to 64.0.
However, the current conditions index rose to a 20-month high of 41.2 from 32.4 in December, beating expectations for an increase to 34.1.
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