2016.10.1807:09:00UTC+00Pound Extends Rise As U.K. Inflation Hits Near 2-year High

The British pound continued to be strong against the other major currencies in the European session on Tuesday, after U.K. inflation hit nearly a two-year high in September.

Data from the Office for National Statistics showed that U.K.'s inflation rose to 1 percent from 0.6 percent in August. Inflation was expected to climb to 0.9 percent.

Another report from ONS showed that factory gate prices rose at a faster pace of 1.2 percent annually in September, following an increase of 0.9 percent in August. This was the third annual increase since June 2014 and exceeded the expected rate of 1.1 percent.

On a monthly basis, output prices advanced 0.2 percent in September, in line with expectations.

Meanwhile, input price inflation eased more-than expected to 7.2 percent from 7.8 percent in August. Prices were forecast to gain 7.4 percent.

Month-on-month, input prices remained flat after rising 0.2 percent in the prior month. Economists had forecast a 0.4 percent increase.

European stocks traded higher as commodities, including copper and oil rose after Fed Vice Chair Stanley Fischer warned against making rash changes to the policy framework in an effort to boost economic growth.

Investors also remain cautious ahead of the third U.S. presidential debate on Wednesday.

In the Asian trading today, the pound traded higher against its major rivals.

In the European trading, the pound rose to 6-day highs of 0.8967 against the euro and 1.2276 against the U.S. dollar, from early lows of 0.9030 and 1.2174, respectively. If the pound extends its uptrend, it is likely to find resistance against the euro and against the greenback.

Against the yen and the Swiss franc, the pound advanced to 4-day highs of 127.66 and 1.2127 from early lows of 126.47 and 1.2037, respectively. The pound may test resistance near 132.00 against the yen and 1.26 against the franc.

Looking ahead, Canada manufacturing sales data for August, U.S. CPI data for September and NAHB's U.S. housing market index for October are slated for release in the New York session.

At 8:00 am ET, New Zealand's Global Dairy Trade auction is due to be held.

At the same time, European Parliament's Brexit negotiator Guy Verhofstadt is expected to speak at conference on future of EU budget, reform of EU institutional set-up, in Brussels.

At 9:00 am ET, European Commission First Vice-President Frans Timmermans is expected to speak at the General Affairs Council meeting, in Luxembourg.