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Pound Advances Amid Risk Appetite

The pound climbed against its key counterparts in the early European session on Wednesday amid risk appetite, as the U.S. midterm election results came in line with expectations, with Democrats seizing the House majority from President Donald Trump's Republican Party and Republicans retaining control of the Senate.

The victory in the Senate would empower Trump to appoint more conservative federal judges and agency officials amid Special Counsel Robert Mueller's investigation of Russian election-meddling in 2016 and possible obstruction of justice.

Traders look ahead to the Federal Reserve's monetary policy announcement due on Thursday, with many expecting the Fed to leave interest rates unchanged.

Traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

Survey data from IHS Markit and Lloyds Banking Group unit Halifax showed that U.K. house price inflation eased sharply in October to its lowest level since March 2013.

The Halifax house price index rose 1.5 percent year-on-year in the three months to October, which was sharply slower than the 2.5 percent increase in September. Economists had forecast a 1.3 percent climb.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the greenback and the yen, it held steady against the franc and the euro.

The pound advanced to 1.3156 against the greenback, its strongest since October 17. The pound is likely to find resistance around the 1.33 level.

The pound rose back to 148.86 against the yen, just few pips short of near a 4-week high of 148.90 hit at 9:30 pm ET. If the pound rises further, it may challenge resistance around the 151.00 level.

The pound spiked up to near a 4-month high of 1.3150 against the franc, from a low of 1.3118 hit at 8:00 pm ET. On the upside, 1.33 is possibly seen as the next resistance level for the pound.

The U.K. currency held steady against the euro, after having advanced to more than a 5-month high of 0.8712 at 9:00 pm ET. The pair was valued at 0.8719 when it closed deals on Tuesday.

Preliminary figures from the Federal Statistical Office showed that Germany's industrial production rose for a second straight month in September, defying expectations for a modest decline.

Production grew a calendar and seasonally adjusted 0.2 percent. Economists had forecast a 0.1 percent decline.

Looking ahead, Swiss National Bank Governing Board Member Fritz Zurbrugg gives a speech titled "Financial Stability: Old and New Challenges" at the Swiss Finance Institute in Zurich at 9:00 am ET.

At 10:00 am ET, Canada Ivey PMI for October is due.

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