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Sterling Rebounds on "Diminished" Brexit Risk; Dollar Flat

1/17/2019, 2:50:55 PMMarket Analysis
Sterling Rebounds on "Diminished" Brexit Risk; Dollar Flat

The pound steadied on Wednesday after having fallen late Tuesday when the U.K. parliament overwhelmingly voted down Prime Minister Theresa May's Brexit deal. The U.S. dollar, meanwhile, was generally flat.

GBP/USD was up 0.17% to 1.2865 as of 11:07 AM ET (16:07 PM GMT), after falling as low as 1.2667 late Tuesday.

The House of Commons voted 432-202 against May's deal, leaving uncertainty over the future of the country's plans to leave the EU on March 29. It seems likely that the U.K. will seek an extension of the deadline. Bank of England Governor Mark Carney said the rebound suggested markets now see a "diminished" risk of a disorderly Brexit with no transitional arrangements.

Meanwhile the euro dipped, with EUR/USD falling 0.10% to 1.1401.

The yen, typically sought by investors as a safe haven during times of economic or market stress, was a touch lower against the dollar, with USD/JPY rising 0.03% to 108.68.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.04% to 95.63.

The greenback remained on the back foot after U.S. Trade Representative Robert Lighthizer that he did not see any progress made on structural issues during U.S. talks with China last week.

The dollar was also pressured by comments by senior Federal Reserve officials on Tuesday suggesting that they are in no hurry to raise interest rates further against a backdrop of slowing global growth.

The risk sensitive Australian and New Zealand dollars were lower, with AUD/USD falling 0.18% to 0.7186 and NZD/USD slumping 0.45% to 0.6782.