The pound weakened against its major counterparts in the European session on Tuesday, as tensions between the European Union and the U.K. intensified after the bloc threatened to ban AstraZeneca’s vaccine exports to other countries.

European Commission President Ursula von der Leyen said that the firm had the obligation to fulfil the demands of Europe and she will forbid planned exports this week in order to abide by the contract with Europe.

The U.K. government is trying to ease tensions as an EU export ban could slow its vaccination programme.

EU leaders are meeting on Thursday to decide whether or not to block exports to the UK.

European stocks dropped as German Chancellor Angela Merkel extended the current lockdown to control another wave of infections.

Data from the Office for National Statistics showed that the UK unemployment rate dropped unexpectedly in three months to January.

The unemployment rate came in at 5.0 percent in three months to January, below economists’ forecast of 5.2 percent and 5.1 percent seen in three months to December.

The pound dipped to near 3-week lows of 0.8645 against the euro and 149.08 against the yen, after rising to 0.8598 and 150.88, respectively in early deals. The pound is poised to challenge support around 0.88 against the euro and 145.00 against the yen.

The pound fell to a 1-1/2-month low of 1.3752 against the greenback, from a high of 1.3864 seen at 7:00 pm ET. If the pound falls further, it is likely to test support around the 1.33 region.

The U.K. currency was down at 1.2778 against the franc, pulling away from its previous high of 1.2854. The pound may locate support around the 1.24 level.

Looking ahead, U.S. new home sales for February are scheduled for release in the New York session.

At 10:00 am ET, Federal Reserve Chair Jerome Powell will testify before the House Financial Services Committee on the CARES Act, along with Treasury Secretary Janet Yellen, via satellite.

The material has been provided by InstaForex Company – www.instaforex.com

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