Pound Advances As PM Liz Truss Finalizes Energy Support Package

The pound climbed against its most major counterparts in the European session on Tuesday, as U.K. Prime Minister Liz Truss is considering a support package worth 40 billion pounds in order to help businesses to lower their energy bills.

The new government is considering two proposals, which include placing a cap on wholesale gas prices.

The other plan is a percentage or unit price reduction offered by energy suppliers to firms.

According to reports, the plan would cap average annual household energy bills at or below the current level of £1,971.

The plan is likely to be announced this month and could be enforced in October.

Survey data from S&P Global showed that the UK construction activity shrank for the second successive month as cost pressures and economic uncertainty dampened demand.

The Chartered Institute of Procurement & Supply construction Purchasing Mangers' Index unexpectedly rose to 49.2 in August from 48.9 in the previous month. The reading was forecast to fall to 48.0.

The pound firmed to 164.58 against the yen, its highest level since July 28. If the pound rises further, it may find resistance around the 166.00 level.

The pound was higher against the euro, at a 1-week high of 0.8566. The currency is likely to face resistance around the 0.84 region.

The pound climbed to a 4-day high of 1.1379 against the franc and held steady thereafter. At Monday's close, the pair was worth 1.1276.

In contrast, the pound retreated to 1.1493 against the dollar, from a 5-day high of 1.1609 hit at 2:45 am ET. Immediate support for the currency is seen around the 1.13 level.