The pound climbed against most major currencies in early European deals on Tuesday, after the Bank of England said that all seven largest lenders in the U.K. passed the stress test, indicating that the banking system has enough capital to support the real economy in a severe global stress scenario.

In its six-monthly Financial Stability Report, the central bank noted that the banking system had overcome the post-crisis phase and it will carefully review the buffer rate at its next quarterly meeting.

The FPC said it "intends to make active use of the time-varying countercyclical capital buffer," which was kept at zero percent for now.

In his press conference, the BoE governor Mark Carney stressed that the motivation for raising its counter-cyclical buffer is to make Britain's banks safer, not to curb credit growth.

Traders await U.K. manufacturing PMI data, due at 4:30 am ET. The manufacturing index is forecast to fall to 53.5 in November from 55.5 in October.

The pound showed mixed performance in Asian trading. While the currency held steady against the euro and the franc, it was slightly higher against the greenback and the yen.

The pound climbed to 186.02 against the yen, its strongest since November 23. On the upside, 187.00 is possibly seen as its next resistance level.

The pound advanced to a 5-day high of 1.5125 against the greenback, while approaching 1.5545 against the franc, its highest since November 19. The next possible resistance level for the pound is seen around 1.525 against the greenback and 1.575 versus the franc.

On the flip side, the pound was trading lower at 0.7020 against the euro, off its early 6-day high of 0.7007.

Figures from Destatis showed that Germany's unemployment rate held steady in October.

The jobless rate came in at an adjusted 4.5 percent in October, the same rate as in the previous month.

Looking ahead, Eurozone unemployment rate for October is due shortly.

In the New York session, Canada GDP data for September, Canada RBC manufacturing PMI for November, U.S. construction spending data for October and ISM U.S. manufacturing PMI for November are slated for release.

At 12:45 pm ET, Federal Reserve Bank of Chicago President Charles Evans is expected to speak about the economic outlook and monetary policy at the Lansing Regional Chamber of Commerce in East Lansing.

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