Pound Rises Amid Risk Appetite

The British pound strengthened against the other major currencies in the early European session on Friday, as investors await the all-important U.S. non-farm payrolls report due later in the day for clues into the timing of any further rate increases.

After a blockbuster private-sector jobs report earlier this week, the official report from the Labor Department is expected to show that employment increased by about 195,000 jobs in February, down compared to January's 227,000. The unemployment rate is expected to dip to 4.7 percent from 4.8 percent..

The U.K.'s FTSE 100 index is currently up 0.45 percent or 32.77 points at 7,347, France's CAC 40 index is up 0.57 percent or 28.25 points at 5,009 and Germany's DAX is up 0.55 percent or 65.37 points at 12,043.

Meanwhile, traders priced in a 25 bps rate hike at the Fed's March 14-15 meeting and a Republican U.S. health plan to overall the healthcare system cleared its first hurdles in Congress on Thursday.

Upbeat comments by European Central Bank President Mario Draghi on the economy and inflation spurred optimism about the economic outlook. While pledging to keep the bank's aggressive stimulus policy at least until the end of the year, Draghi on Thursday said the risks of deflation have "largely disappeared'' and the inflation outlook has improved.

In other economic news, data from the Office for National Statistics showed that U.K. industrial production decreased for the first time in three months in January. Industrial output slid 0.4 percent in January from December, when it grew 0.9 percent. Output was forecast to fall 0.5 percent. This was the first decrease since October.

On a yearly basis, growth in industrial output eased to 3.2 percent in January, in line with expectations, from 4.3 percent in December. Manufacturing output grew 2.7 percent annually, following a 4.2 percent rise in December. Economists had forecast a 2.9 percent increase.

Another report from ONS showed that construction output fell by 0.4 percent compared with December. However, output grew on a three month on three month basis by 1.8 percent.

Also, the U.K. visible trade deficit remained broadly unchanged in January. The deficit on trade in goods, came in at GBP 10.83 billion versus GBP 10.91 billion in December.

In the Asian session today, the pound held steady against its major rivals.

In the European trading, the pound rose to a 1-week high of 140.48 against the yen, from an early low of 139.65. The pound may test resistance around the 142.00 region.

Against the U.S. dollar, the pound advanced to 1.2174 from an early low of 1.2150. The pound is likely to find resistance around the 1.23 region.

The pound edged up to 1.2324 against the Swiss franc, from an early near 2-month low of 1.2288. If the pound extends its uptrend, it is likely to find resistance around 1.26 against the franc.

Meanwhile, the pound fell to more than 1-1/2-month low of 0.8731 against the euro, from an early high of 0.8691. The pound may test support near the 0.88 region.

Looking ahead, Canada and U.S. jobs data for February and U.S. Baker Hughes rig count data are set to be announced in the New York session.

At 2:00 pm ET, U.S. Federal Reserve monthly budget balance statement is set to be published.