The pound strengthened against its major counterparts in the European session on Tuesday, as the Federal Reserve’s unlimited quantitative easing and aggressive asset-buying from the Bank of Japan boosted risk sentiment.
Italy reported smaller increase in coronavirus cases for the second day running and the head of Germany’s public health institute said the upward trend in the number of COVID-19 cases was levelling off, helping investor sentiment recover.
Investor sentiment improved after the U.S. Federal Reserve announced extensive new measures, including an unlimited expansion of its asset purchases, to support the world’s largest economy during the coronavirus pandemic.
British Prime Minister Boris Johnson called the virus the “biggest threat this country has faced for decades” as the country goes into effective lockdown to deal with the threat of the pandemic.
Survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK private sector logged its record decline in business activity in March amid emergency public health measures to contain the spread of coronavirus.
The flash IHS Markit/Chartered Institute of Procurement & Supply composite output index fell to a record 37.1 in March from 53.0 in February. The reading was also below the forecast of 45.1.
The pound appreciated to 4-day highs of 1.1784 against the greenback and 130.24 against the yen, after falling to 1.1476 and 127.73, respectively in early deals. Immediate resistance for the pound is seen around 1.25 against the greenback and 135.00 against the yen.
The pound moved up to 0.9221 against the euro and 1.1478 against the franc, from its early lows of 0.9324 and 1.1335, respectively. The pound is poised to test resistance around 0.88 against the euro and 1.25 against the franc.
Looking ahead, U.S. new home sales for February are scheduled for release in the New York session.