Pound Firms After Strong Data

The pound climbed against its major counterparts in the European session on Wednesday, as encouraging data from China and Europe allayed some of the fears over rising Covid-19 infections.

The latest survey from Caixin showed the manufacturing sector in China continued to expand in June, and at a faster rate, with a manufacturing PMI score of 51.2, up from 50.7 in May.

Factories across the euro area recorded a stronger performance than initially reported in June, a survey showed. The final PMI rose to a four-month high of 47.4 from 39.4 in May.

The IHS Markit/CIPS U.K. manufacturing Purchasing Managers' Index (PMI) rose to 50.1 from 40.7 in May, unrevised from a preliminary reading.

The pound strengthened to a 5-day high of 0.9050 against the euro, after falling to 0.9079 at 1:30 am ET. If the pound rises further, it may find resistance around the 0.88 level.

Data from the Federal Employment Agency showed that German unemployment increased less than expected in June.

The number of unemployed persons rose by 69,000 in June, compared to economists' forecast of 120,000. In May, the number of people out of work increased by 237,000.

The pound appreciated to a 5-day high of 1.2414 against the greenback, from a low of 1.2359 set at 1:15 am ET. The pound is likely to challenge resistance around the 1.29 level.

The pound reversed from an early low of 1.1705 against the franc, with the pair touching a 5-day high of 1.1750. On the upside, 1.24 is possibly seen as the next resistance level for the pound.

In contrast, the pound held steady against the yen, after having retreated from an 8-day high of 133.95 set in the Asian session. At yesterday's close, the pair was worth 133.83.

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

In the New York session, U.S. ISM manufacturing index for June and construction spending for May are set for release.

At 2:00 pm ET, the Fed releases minutes from June 9-10 meeting.