Pound Advances Amid Risk Appetite On Fed Rate Hike Doubts

The pound erased its early losses against its major counterparts in European deals on Tuesday, and strengthened, amid risk appetite and as a survey from the Confederation of British Industry showed business volumes were unchanged in the three months to August for business and professional services despite the pessimistic outlook following the U.K.'s vote to leave the European Union.

The business lobby group found that optimism slumped in the services sector but the impact on day-to-day business so far has been "relatively modest."

European shares are higher, with a rise in oil prices and expectations that the Federal Reserve may delay hiking interest rates until after the presidential election in November lifting sentiment.

Market participants await Friday's monthly jobs report for further clues to whether a September hike is in the cards.

In other economic news, data from the Bank of England showed that U.K. mortgage approvals declined to the lowest since early 2015.

The number of mortgage approvals fell to 60,912 in July from 64,152 in June. This was the lowest since January 2015. Economists had forecast approvals to fall to 61,900.

The currency was lower against most major counterparts in Asian trading.

The pound advanced to near a 4-week high of 1.2861 against the franc, off its early low of 1.2791. On the upside, 1.30 is likely seen as the next resistance level for the pound.

Survey data from the Swiss Economic Institute KOF showed that a measure reflecting Swiss economic activity declined for the first time in three months and at a faster-than-expected pace in August, to its lowest level in eight months.

The KOF Economic Barometer declined to 99.8 from 103.5 in July, which was revised from 102.7. Economists had forecast a score of 102.

The pound bounced off to 1.3118 against the greenback, from a low of 1.3059 hit at 2:45 am ET. The pound is seen finding resistance around the 1.33 mark.

The pound climbed to 134.25 against the yen and 0.8515 against the euro, coming off from its early 4-day lows of 133.34 and 0.8552, respectively. The next possible resistance for the pound may be found around 135.5 against the yen and 0.84 against the euro.

Looking ahead, U.S. S&P/Case-Shiller home price index for June and U.S. consumer confidence index for August are set to be published shortly.