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Pound Bounces Off After U.K. PM May Calls For Snap Election In June


The pound advanced against its key counterparts in the European session on Tuesday, trimming its early losses, as the U.K. Prime Minister Theresa May called for an early election in June amid divisions in the Westminister regarding the Brexit negotiations.

In a surprise statement, the Prime Minister announced plans for a general election to be held on June 8, with an aim to remove the uncertainty in the Brexit negotiations with the European Union.

May conceded that the opposition parties are opposing the government's Brexit plans, adding that it risks "our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country."

She will hold a vote in the House of Commons for the approval of an early election on Wednesday.

U.K. Labour Party leader Jeremy Corbyn welcomed May's surprise announcement, saying that the decision will "give the British people the chance to vote for a government that will put the interests of the majority first."

The pound showed mixed performance in the Asian session. While the currency fell against the franc and the greenback, it rose against the yen. Against the euro, it held steady.

After having fallen to a 4-day low of 1.2515 hit against the greenback at 5:15 am ET, the pound firmed to 2-1/2-month high of 1.2678. Continuation of the pound's uptrend may see it challenging resistance around the 1.28 region.

The pound advanced to an 8-day high of 138.10 against the Japanese yen, following a low of 136.15 hit at 5:45 am ET. The pound is seen finding resistance around the 140.00 level.

S&P Global Ratings maintained the sovereign rating of Japan at 'A+' with 'stable' outlook.

The rating agency said the economy's strong external position, prosperous and diversified economy, political stability, and stable financial system balance its very weak public finances.

The pound reversed from an early weekly high of 0.8512 against the euro, rising to near a 2-month high of 0.8415. Further uptrend may see the pound challenging resistance around the 0.83 region.

The International Monetary Fund Managing Director Christine Lagarde said that France's presidential election is adding to the existing political uncertainty worldwide as it raises several questions on the future of the euro area.

There is an uncertainty and growing concern about the outcome of the French election, Lagarde said in an interview to a group of European reporters.

Following a 4-day low of 1.2552 hit at 4:30 am ET, the pound spiked up to a 4-month high of 1.2701 versus the Swiss franc. The pound is poised to challenge resistance around the 1.28 mark.

Looking ahead, U.S. industrial production for March is due shortly.

At 9:00 am ET, Kanas City Fed President Esther George speaks before the Levy Economics Institute of Bard College's 26th Annual Minsky Conference.

by RTTNews Staff Writer

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