The British sterling strengthened in early deals Tuesday on risk re-emergence as tension in Syria eased and last week's softer than expected U.S. jobs data reduced worries about an immediate Fed tapering.
Russia will immediately work with Syria, the Russian Foreign Minister Lavrov said yesterday in Moscow "if the establishment of international control of chemical weapons in the country will help avoid military strikes".
In response to a Russian proposal to place Syria's chemical weapons under international control, the U.S. President Barack Obama said he would change his mind on military action against Syria, if "diplomatic efforts come up with a formula that gives the international community a verifiable, enforceable mechanism to deal with these chemical weapons in Syria"
In economic news, Japan's tertiary industry index was down a seasonally adjusted 0.4 percent in July at 99.9, beating forecasts for a contraction of 0.5 percent.
According to the minutes of the Bank of Japan's policy board meeting held on August 7 and 8, members of the bank's board believe that the Japanese economy is beginning to see a moderate recovery.
The BoJ decided to keep its monetary easing program unchanged at the meeting, retaining its plan to increase the monetary base at an annual pace of JPY 60 to 70 trillion, and also holding interest rates at the record low of 0.10 percent.
China's industrial production climbed to 10.4 percent year-over-year in August following 9.7 percent growth recorded in July. Economists expected the production to grow 9.9 percent.
Retail sales rose 13.4 percent year-over-year in August, improving from previous month's growth rate of 13.2 percent. This was also better than the expected 13.3 percent increase.
Pound advanced to 1.4690 against the Swiss franc, heading closer to the key 1.27 level after a gap of 4-days. The currency cross' failed test of 1.42 support in late August and a subsequent reversal point towards solid rallies toward the 1.48 area.
The sterling also rose to 157.36 against the yen, its highest level since August 2009. The next probable resistance for the pound-yen pair is seen around the 158.70 area.
The British currency strengthened to session's highs of 0.8420 against the euro and 1.5715 against the US dollar in early deals on Tuesday. If the pound extends advance, likely resistance levels are seen at 0.84 against the euro and 1.5730 against the US dollar.
