Pound Advances On BoE Rate Hike Hopes

The pound climbed against its most major counterparts in the Asian session on Tuesday, in response to comments from the Bank of England Governor Mark Carney reiterating an interest rate rise in coming months.

Speaking at the International Monetary Fund's headquarters in Washington on Monday, Carney said that "some withdrawal of monetary stimulus" would be necessary to bring UK inflation back to the 2 percent goal, although any rate rise would be 'gradual' and 'limited' "If the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target," Carney said.

Investors await the U.S. Federal Reserve's two-day monetary policy meeting that begins later in the day. While leaving interest rates unchanged, the Fed may announce details on its trillions balance sheet unwinding.

The pound weakened against its major rivals on Monday.

The pound firmed to 151.59 against the yen, its strongest since June 2016. On the upside, 154.00 is possibly seen as the next resistance for the pound-yen pair.

The pound edged up to 1.3022 against the franc and 1.3552 against the dollar, from its early lows of 1.2962 and 1.3494,respectively. On the upside, 1.31 and 1.38 are possibly seen as the next resistance levels for the pound against the franc and the dollar.

On the flip side, the pound weakened to a 4-day low of 0.8877 against the euro, off its early high of 0.8843. Further weakness may take the pound to a support around the 0.90 region.

Looking ahead, Eurozone current account data and construction output for July, as well as German ZEW economic sentiment index for September are due in the European session.

In the New York session, Canada manufacturing shipments for July and U.S. housing starts, building permits and export and import prices for August are set for release.