Investing.com - The pound hit fresh three-week lows against the U.S. dollar on Wednesday, as the release of upbeat U.S. economic reports supported demand for the greenback.
GBP/USD hit 1.6326 during U.S. morning trade, the pair's lowest since December 25; the pair subsequently consolidated at 1.6354, retreating 0.52%.
Cable was likely to find support at 1.6220, the low of December 17 and resistance at 1.6464, Tuesday's high.
The dollar strengthened broadly after data showed that U.S. producer price inflation rose at the strongest rate in six months in December.
Producer price inflation rose 0.4% last month, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier.
Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.
A separate report showed that manufacturing activity in the Empire State expanded at the fastest pace since May 2012 this month.
The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December. Analysts had expected the index to rise to 3.75.
The data reinforced expectations that the U.S. economic recovery will continue to deepen going into this year and offset lingering concerns over last week’s surprising poor U.S. nonfarm payrolls report.
Sterling was fractionally higher against the euro, with EUR/GBP easing 0.08% to 0.8314.