The pound depreciated against its major rivals in the European session on Tuesday, as investors awaited the Federal Reserve's policy decision for more clarity on the rate outlook.

The Fed is expected to deliver a 25 basis point interest rate hike when it ends its two-day meeting on Wednesday.

Chair Powell is expected to sound hawkish and reiterate that interest rates will continue to rise further and remain higher for longer.

Data from the Bank of England showed that UK mortgage approvals declined to the lowest level in more than two years in December as the cost of living crisis and the rising interest rate took its toll on the property market.

The number of mortgages approved for house purchases fell to 35,600 in December from 46,200 in November.

Reversing from its previous highs of 1.2371 against the greenback and 0.8772 against the euro, the pound dropped to 6-day lows of 1.2295 and 0.8818, respectively. The currency is seen finding support around 1.21 against the greenback and 0.90 against the euro.

The pound depreciated to a 6-day low of 159.90 against the yen and a 5-day low of 1.1365 against the franc, down from its prior highs of 161.19 and 1.1435, respectively. The currency is poised to find support around 157.00 against the yen and 1.11 against the franc.

Grafico Cross Sterling vs US Dollar (FX:GBPUSD)

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Grafico Cross Sterling vs US Dollar (FX:GBPUSD)

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