Pound Climbs On Trade Optimism

The pound was higher against its most major counterparts in the European session on Wednesday, as U.K. markets advanced on optimism about U.S-China trade talks and strong earnings from Apple overnight.

Apple's earnings and revenue estimates for the second quarter topped forecasts, sending its stock surging in after-market trading in the U.S. Trade talks between China and U.S. began in Beijing, with the U.S. aide describing as it as "productive," as both seek to end the spat.

US Treasury Secretary Steven Mnuchin wrote on twitter that US trade negotiators concluded productive meetings with China's Vice Premier Liu He and that decisive talks will be held in the U.S. next week.

The Federal Reserve is widely expected to leave interest rates unchanged when it ends a two-day policy meeting later in the day.

Traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference for clues on the outlook for interest rates.

Survey data from the Nationwide housing society showed that UK house prices rose at the fastest annual pace in five months in April, but inflation remained subdued.

The house price index rose 0.9 percent year-on-year following a 0.7 percent increase in March. Economists had expected the inflation rate to remain unchanged.

Survey data from IHS Markit showed that UK manufacturing expansion slowed to a two-month low in April amid a decline in export business and an easing in the robust pace of stock-building.

The IHS Markit/CIPS Purchasing Managers' Index, or PMI, fell to 53.1 in April from March's 13-month high of 55.1. The score was in line with economists' expectations.

The currency has been trading higher against its major counterparts in the Asian session, barring the euro.

The pound strengthened to more than a 2-week high of 1.3074 against the greenback, from a low of 1.3024 hit at 5:00 pm ET. The pound is seen finding resistance around the 1.32 level.

The pound appreciated to 145.70 against the yen, its highest since April 18. Next key resistance for the pound is seen around the 147.00 level.

The pound climbed to 0.8587 against the euro, a level unseen since April 5. On the upside, 0.84 is possibly seen as the next resistance level for the pound.

On the flip side, the pound pared some of its early gains against the franc with the pair trading at 1.3285.This follows a high of 1.3304 touched at 3:00 am ET. The pound is poised to test support around the 1.30 level.

Looking ahead, at 8:15 am ET, ADP private payrolls data for April is scheduled for release.

In the New York session, U.S. construction spending for March and ISM manufacturing for April will be released.

The Fed announces its interest rate decision at 2:00 pm ET. Economists widely expect the fed funds rate to remain in a range between 2.25 percent and 2.50 percent.