Investing.com - The pound strengthened over the dollar on Tuesday after disappointing numbers out of the U.S. housing sector hit the wire and weakened the greenback and gave investors room to shrug off soft U.K. inflation data.
In U.S. trading on Tuesday, GBP/USD was up 0.55% at 1.5723, up from a session low of 1.5614 and off a high of 1.5785.
Cable was likely to find support at 1.5599, Monday's low, and resistance at 1.5828, the high from Nov. 27.
U.S. housing starts fell unexpectedly last month, official data showed on Tuesday.
The Census Bureau reported earlier that the number of housing starts fell to 1.028 million units from 1.045 million in the preceding month whose figure was revised up from 1.009 million.
Analysts had expected the number of housing starts to rise to 1.030 million last month.
Building permits took a similar turn for the worse.
The Census Bureau reported that the number of building permits issued in November fell to 1.035 million from 1.080 million in the preceding month .
Analysts were expecting the number of building permits issued to fall to 1.060 million last month.
While a broader analysis of the U.S. housing sector still points to recovery, setbacks such as Tuesday's reports softened the greenback, namely as investors jumped to the sidelines to await the Federal Reserve's statement on monetary policy and interest rates due out on Wednesday.
Meanwhile across the Atlantic, the U.K. Office for National Statistics said the annual rate of consumer price inflation slowed to 1.0% last month from 1.3% in November. It was the lowest rate of inflation since September of 2002 and came in below forecasts for a 1.2% reading.
Consumer prices fell 0.3% on a month-over-month basis after a 0.1% increase in October, missing market calls for an unchanged reading.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.2% last month, down from 1.5% in October. Economists had expected an unchanged reading.
The report also showed that the U.K. house prices index rose just 10.4% last month, down from 12.1% in October.
Elsewhere, sterling was up against the euro, with EUR/GBP down 0.11% at 0.7944, and up against the yen, with GBP/JPY up 0.25% at 184.71.
On Wednesday, expect markets to move on the Federal Reserve's statement on monetary policy and interest rates.
Elsewhere, the U.S. is to release data on consumer inflation and the current account.
The U.K. is to release data on the change in the number of people employed, the unemployment rate and average earnings. In addition, the BoE is to publish the minutes of its latest policy meeting.