The pound firmed against its major counterparts in the European session on Tuesday, as European stocks advanced amid positive earnings results, while investors awaited the Federal Reserve's monetary policy meeting for clues on the interest rate path.

The Fed is expected to hold rates steady at the end of its two-day meeting that starts today.

Investors focus on U.S. reports on home prices, consumer confidence and Chicago-area business activity due to be published later in the day.

Earlier today, an official survey showed Chinese manufacturing activity unexpectedly returned to contraction in October, and the Bank of Japan announced a tweak to its yield curve control policy.

Traders watched the latest developments in the Middle East after Israeli Prime Minister Benjamin Netanyahu rejecting calls for a ceasefire in the war against Hamas.

The pound advanced to a 1-week high of 1.2200 against the greenback, 1-1/2-month high of 183.83 against the yen and a fresh 2-week high of 1.1004 against the franc, from its previous lows of 1.2136, 181.27 and 1.0951, respectively. The pound is seen finding resistance around 1.24 against the greenback, 185.00 against the yen and 1.11 against the franc.

In contrast, the pound weakened against the euro, touching nearly a 6-month low of 0.8754. If the currency slides again, it may find support around the 0.89 area.

Looking ahead, Canada GDP data for August, U.S. employment cost data for the third quarter, U.S. Redbook report, U.S. S&P Case-Shiller home price index for August, U.S. Chicago PMI for August, U.S. consumer confidence for October and U.S. Dallas Fed services index for October are set to be published in the New York session.

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