The pound firmed against its major counterparts in the European session on Tuesday, as European stocks edged higher amid strong earnings from BP and China's stimulus measures for battered financial markets.

Investors looked ahead to comments from Fed officials for clues on the timing of the first interest-rate cut.

Strong U.S. economic data and hawkish comments from Fed Chair Jerome Powell intensified hopes that the central bank is unlikely to reduce rates before May.

Traders are pricing in an 83% chance the Fed will keep rates unchanged in March, and have lowered expectations for a similar move in May.

Survey results from S&P Global showed that UK construction activity contracted at a slower pace in January as business optimism reached a two-year high.

The construction Purchasing Managers' Index posted 48.8 in January, up from 46.8 in the previous month.

The pound edged up to 1.2583 against the greenback, 186.78 against the yen and 0.8536 against the euro, off its early lows of 1.2527, 186.19 and 0.8570, respectively. The currency is poised to challenge resistance around 1.28 against the greenback, 188.00 against the yen and 0.84 against the euro.

The pound touched 1.0985 against the franc, setting an 8-day high. On the upside, 1.12 is possibly seen as the next resistance level.

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