Pound Higher As Virus Concerns Ease

The pound firmed against its key counterparts in the European session on Wednesday, as European equities rose on receding concerns about the coronavirus outbreak amid the slowing rate of new cases.

According to data through Monday, the growth rate of new coronavirus cases in China has slowed to the lowest since Jan. 31.

Further underpinning sentiment were comments from an influential economist at a top government think tank, who said that the virus outbreak will only have a one-off hit on the economy and it will not delay the fulfillment of the long term goal.

The virus outbreak will not have a long-term impact on the supply of production and productivity, Cai Fang said in an article in the People's Daily, the newspaper of the Chinese Communist Party.

The currency showed mixed trading in the Asian session. While it held steady against the euro and the franc, it rose against the greenback and the yen.

The pound climbed to a 6-day high of 1.2985 against the greenback, from a low of 1.2947 seen at 5:00 pm ET. Next key resistance for the pound is seen around the 1.32 level.

The pound appreciated to a 1-week high of 142.88 against the yen, from yesterday's closing value of 142.20. Should the pound rises further, 144.00 is seen as its next resistance level.

Data from the Bank of Japan showed that Japan M2 money stock rose 2.8 percent on year in January, coming in at 1,042.9 trillion yen.

That exceeded expectations for an increase of 2.7 percent, which would have been unchanged from the December reading.

The pound strengthened to 0.8408 against the euro, its biggest since February 3. The next immediate resistance for the pound is seen around the 0.82 mark.

The U.K. currency was trading higher at 1.2653 against the franc, up from a low of 1.2633 set at 5:15 pm ET. On the upside, 1.28 is likely seen as the next resistance for the pound.

Looking ahead, Federal Reserve Chair Jerome Powell will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee in Washington DC at 10:00 am ET.

In the New York session, U.S. monthly budget statement for January is scheduled for release.