Pound Advances As European Shares Climb

(RTTNews) - The pound firmed against its most major counterparts in the European session on Tuesday amid risk appetite, as concerns over the banking crisis receded following an acquisition deal for U.S.-based Silicon Valley Bank.

The deal eased contagion fears for the broader banking sector and sparked a rally in European stocks.

US regulators said on Monday that they would support the acquisition of the Silicon Valley Bank by regional lender First Citizens Bank, which could trigger a loss of about $20 billion to a government-run insurance fund.

In his prepared remarks for Congressional hearing, Fed Vice Chair for Supervision Michael Barr said that SVB's failure is a textbook case of mismanagement.

"The bank waited too long to address its problems, and ironically, the overdue actions it finally took to strengthen its balance sheet sparked the uninsured depositor run that led to the bank's failure," he noted.

The pound climbed to a 5-day high of 1.2330 against the greenback and a 6-day high of 1.1316 against the franc, from its prior lows of 1.2278 and 1.1232, respectively. The currency is seen finding resistance around 1.27 against the greenback and 1.15 against the franc.

The pound was higher against the yen, at 161.77. If the pound continues its rise, 165.00 is possibly seen as its next resistance level.

In contrast, the pound pulled back to 0.8796 against the euro, reversing from a 6-day high of 0.8771 seen in early trading. The pound is likely to challenge support around the 0.90 region, if it drops again.

Looking ahead, U.S. wholesale inventories and advance goods trade balance for February, as well as consumer confidence index for March and Federal Housing finance agency's U.S. house price index and S&P/Case-Shiller home price index for January will be featured in the New York session.