The pound erased its early losses against its major rivals in the European session on Tuesday, as European shares rose on strong earnings results and M&A activity.

AstraZeneca rejected German media reports that its Covid vaccine has low efficacy in older adults.

The European Union blamed the drug maker over vaccine supply, pressuring to deliver more coronavirus vaccine doses to its 27 nation bloc as per the contractual arrangements.

In Italy, Prime Minister Giuseppe Conte resigned to get a fresh mandate from the President to try and forge a new coalition Government.

The resignation comes after a junior party left his coalition in a dispute over the government's handling of the coronavirus crisis.

In economic news, the U.K. unemployment rate increased and the employment rate continued to decline in three months to November, labor force survey results from the Office for National Statistics showed.

The jobless rate rose 0.6 percentage points from the previous quarter to 5 percent in three months to November. The expected rate was 5.1 percent.

At the same time, the employment rate dropped 0.4 percentage points sequentially to 75.2 percent. Employment decreased by 88,000 on the quarter.

The number of people out of work increased by 202,000 on quarter to 1.72 million in three months to November.

The pound advanced to 142.12 against the yen and 1.3701 against the greenback, after falling to a 5-day low of 141.28 and a 1-week low of 1.3609, respectively. The pound is likely to find resistance around 145.00 against the yen and 1.41 against the greenback.

The pound jumped to a 5-day high of 1.2174 against the franc and a 4-day high of 0.8865 against the euro, off its early low of 1.2104 and a 4-day low of 0.8905, respectively. The pound is seen finding resistance around 1.24 against the franc and 0.86 against the euro.

Looking ahead, U.S. FHFA's house price index and S&P/Case-Shiller home price index for November and consumer confidence index for January will be featured in the New York session.