The pound firmed against its key counterparts in early European deals on Tuesday amid risk appetite, as investors looked ahead to a key speech from Fed Chair Janet Yellen this Friday for more clues about the central bank's next rate hike.

Market participants are speculating that a rate hike is unlikely at the Fed's September or November meetings, despite hawkish rhetoric from a couple of Fed officials recently.

Better-than-expected private sector activity surveys from Eurozone and France also buoyed investor sentiment.

Flash survey results from Markit showed that Eurozone private sector activity grew to a seven-month high in August, with a PMI score of 53.3.

The pound showed mixed trading against its major rivals in Asian deals. While the currency rose against the greenback and the franc, it declined against the yen. Against the euro, it held steady.

The pound spiked up to near a 2-week high of 132.32 against the Japanese yen, up from a low of 131.45 hit at 8:45 pm ET. The pound is seen finding resistance around the 137.00 mark.

The pound climbed to 1.2680 against the franc, its highest since August 11, from an early low of 1.2628. On the upside, 1.28 is likely seen as the next resistance level for the pound.

Data from the Federal Customs Administration showed that Switzerland's trade surplus declined to a 3-month low in July.

The trade surplus fell to CHF 2.9 billion in July from CHF 3.5 billion in June. This was the lowest since April, when the surplus totaled CHF 2.4 billion.

The pound appreciated to an 11-day high of 0.8589 against the euro and near a 3-week high of 1.3210 versus the dollar, coming off from its previous lows of 0.8629 and 1.3129, respectively. If the pound extends rise, 0.84 and 1.33 are possibly seen as its next resistance levels against the euro and the greenback, respectively.

Looking ahead, Markit's flash U.S. manufacturing PMI for August, U.S. Richmond Fed manufacturing index for August and U.S. new home sales data for July are set to be published in the New York session.

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