The pound appreciated against its major rivals in the European session on Tuesday, as the nation's jobless rate fell to the lowest level since 1974 in three months to March and optimism about a gradual reopening in China's biggest city following a six-week COVID-19 lockdown lifted European stock markets.

Data published from the Office for National Statistics showed that the unemployment rate declined 0.3 percentage points sequentially to 3.7 percent in three months to March, which was the lowest since December 1974. Moreover, the rate remained below the forecast of 3.8 percent.

Employment grew 121,000 from March to a record 29.5 million in April.

The employment rate increased 0.1 percentage points on the quarter to 75.7 percent in the first quarter.

In the first quarter, average earnings including bonuses grew 7.0 percent from the last year, well above the expected rate of 5.4 percent. However, excluding bonus, earnings were up 4.2 percent, slower than the 4.1 percent expected growth.

European markets rose as China's financial hub Shanghai announced a gradual reopening plan after reporting zero community transmission for the third day.

The pound strengthened to 1.2487 against the dollar, its highest level since May 5. Against the franc, it touched nearly a 4-week high of 1.2444. The currency is likely to find resistance around 1.28 against the dollar and 1.28 against the franc.

Reversing from its early lows of 158.79 against the yen and 0.8475 against the euro, the pound rallied to an 8-day high of 161.60 and a 2-week high of 0.8393, respectively. If the pound rises again, it may test resistance around 164.00 against the yen and 0.82 against the euro.

Looking ahead, U.S. NAHB housing market index for May, business inventories data for March, retail sales and industrial production for April will be released in the New York session.

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