In early European deals on Tuesday, the pound strengthened to multi-day highs against its U.S., European and Swiss counterparts on the back of a rise in U.K. stocks. The pound also climbed against the yen during this time.
By climbing in early European session, the pound recouped its Asian session’s loss against the dollar and yen.
European stocks climbed today as investor sentiment was supported by stronger-than-expected quarterly profit from U.S. firm Alcoa, which reported earnings after U.S. markets closed on Monday.
U.K.’s benchmark FTSE 100 Index is currently trading at 5,237.78 – up 71.18 points or 1.38% over its previous close.
Aluminum producer Alcoa, Inc. said Monday after the markets closed that it swung to a second quarter profit, as sales jumped 22% from a year earlier on improved end-market demand. The company’s net income for the second quarter was $136 million or $0.13 per share, compared to a net loss of $454 million or $0.47 per share for the year-ago quarter.
The UK currency extended its uptrend after a report showed at 4:30 am ET that the nations’ annual inflation slowed less than expected in June.
U.K. annual inflation slowed to 3.2% in June from 3.4% in May, data from the Office for National Statistics showed. Economists were expecting annual inflation to slow to 3.1%. Still, inflation figure is above the central bank’s 2% target.
On a monthly comparison, the consumer price index edged up 0.1%, down from 0.2% in May and 0.6% in April.
The pound that fell to 1.4967 against the dollar at 2:35 am ET Tuesday gained ground thereafter. As of now, the pound-dollar pair is trading at a 4-day high of 1.5120, compared to 1.5025 hit late New York Monday. If the UK currency advances further, it may find resistance around the 1.523 level.
During early European deals on Tuesday, the pound climbed against the Swiss franc. The pound-franc pair is currently trading at a 4-day high of 1.6064 and the next upside target level is seen at 1.630. The pair closed yesterday’s trading at 1.5945.
Swiss producer and import price index rose 0.9% year-on-year in June following 1.4% increase in May, data released by the Federal Statistical Office showed today. On a monthly basis, the producer and import price index fell for the first time in four months.
The pound that showed choppy trading against the euro in Asian deals on Tuesday advanced in early European session. Currently, the pound is trading at a 5-day high of 0.8320 against the euro with 0.830 seen as the next upside target level. At yesterday’s close, the euro-pound pair was quoted at 0.8383.
The euro plummeted as Moody’s Investors Service today downgraded Portugal’s government bond ratings to A1 from Aa2, saying that the Portuguese government’s financial strength will continue to weaken over the medium term and the economy’s growth prospects are likely to remain weak.
The euro’s selling pressure increased as a report showed that Germany’s economic sentiment index declined in July.
The German WPI and the French CPI – both for June, which were also released today likely influenced the euro.
The pound strengthened against the yen after falling to 132.48 at 4:00 am ET Tuesday. The pound-yen pair that closed yesterday’s trading at 133.18 is now worth 133.80. If the pound rises further, it may target the 134.6 level.
Investors now turn toward the North American session, in which the U.S. trade balance report for May is expected at 8:30 am ET.
The U.S. monthly budget statement for June is due at 2:00 pm ET.