Forex - Pound near 3-month highs vs. dollar

The pound was trading close to three-month highs against the dollar on Tuesday as the threat of a U.S. military intervention against Syria receded, while upbeat Chinese economic data also fuelled risk appetite.

GBP/USD hit 1.5728 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.5720, gaining 0.17%.

Cable was likely to find support at 1.5675 and near-term resistance at 1.5750, the high of June 15.

Market sentiment was bolstered after Syrian Foreign Minister Walid al-Moallem said Tuesday that his government agreed to a Russian proposal to place its chemical weapons under international control. 

U.S. President Barack Obama has said he would put plans for a military strike against Syria on hold if the country agreed to relinquish control of its chemical weapons.

Investor confidence was also boosted after reports on industrial production and retail sales from China added to signs that the world’s second largest economy is recovering from a slowdown.

Data released on Tuesday showed that Chinese retail sales rose unexpectedly in August, while Chinese industrial production rose more than forecast last month.

Elsewhere, sterling was fractionally higher against the euro, withEUR/GBP dipping 0.08% to 0.8439.

In the euro zone, data on Tuesday showed that the recession in Italy is deeper than had been previously thought.

The economy contracted by 0.3% in the second quarter, worse than the initial estimate of a 0.2% contraction, bringing the annualized rate of contraction to 2.1% from the initial estimate for a  2% contraction.

Meanwhile, Italian government borrowing costs rose above Spain's for the first time in 18 months on Tuesday, with Italian 10-year bond yields trading at 4.521% compared to 4.508% for Spain.