Sterling bounced back more than 1.50 percent early on Wednesday after a report said Prime Minister Theresa May has accepted that Parliament should be allowed to vote on her plan for taking Britain out of the European Union. She however asked lawmakers to allow her space to negotiate.
The pound rose against all of its 31 major peers as May’s move calmed forex investors’ concern that she was adopting an aggressive approach to negotiations with the EU. Sterling was severely under pressure, dropping more than 6 percent this month until Tuesday, following May signalling her intention to put immigration curbs before the City of London’s interests in pulling Britain out of the bloc.
GBP/USD climbed 1.5 percent to 1.2301, after dropping to as low as 1.2086 on Tuesday, heading back towards a 31-year low of 1.1450 hit on Friday as investors feared the impact on Britain from leaving the European Union.
The dollar index, shed 0.2 percent to 97.504 after rising as high as 97.758 on Tuesday, its highest peak since March. USD/JPY traded around 103.60, fairly flat on the day while EUR/USD trades at 1.1040, extending its lows from yesterday as it hit 1.1033 overnight.
The dollar has been supported due to rising expectations that the US Federal Reserve would raise interest rates as early as this year, with markets pricing in around a 70 percent chance of a hike in December.
