Forex - GBP/USD holds gains but upside limited

Forex - GBP/USD holds gains but upside limited

Forex pros - The pound held gains against the broadly weaker U.S. dollar on Tuesday, but the upside was limited as markets remained cautious ahead of an emergency summit of European Union leaders later in the week.

GBP/USD hit 1.6160 during European afternoon trade, the pair's highest since July 15; the pair subsequently consolidated at 1.6122, gaining 0.41%.

Cable was likely to find support at 1.6004, Monday's low and short-term resistance at 1.6193, the high of July 14 and a three-week high.

Market sentiment was boosted by a rebound in equities, following sharp falls on Monday and as yields on Italian and Spanish government bonds retreated slightly after rising sharply in the previous session amid fears over sovereign debt contagion.

Meanwhile, euro zone leaders were to meet in Brussels attempt to finalize a second EUR110 billion bailout for Greece and discuss the overall financial stability of the single currency bloc.

The pound is seen as particularly vulnerable to the debt crisis in the euro zone, due to the exposure of British lenders to euro zone government debt and because of the U.K.'s close trade ties with the euro zone.

Elsewhere, the pound dipped against the euro, with EUR/GBP inching up 0.06% to hit 0.8794.

Later Tuesday, the U.S. was to publish government data on building permits and housing starts.