Dollar is suppressed by ascendant pound after May calls UK vote

Dollar is suppressed by ascendant pound after May calls UK vote

On Wednesday, the dollar index traded close to three-week minimums, dragged down by a resurgent pound after British Prime Minister Theresa May called for an early general election ahead of Brexit talks.

The UK currency sailed to more than six-month peaks after May told that the election would secure the strong as well as stable leadership position required for negotiations with the EU about terms for the looming exit.

The dollar index, normally tracking the US dollar against a basket of six counterparts, jumped 0.1%, reaching 99.548, which is not far from its overnight minimum of 99.465, its deepest low since March 28.

The British pound was steady on the day at $1.2845, having leapt as high as $1.2908 on Tuesday, its highest value since early October, as market participants scurried to cover short positions.

May's decision to hold a vote actually gave the pound a lift higher, as some financial analysts told.

The greenback inched up 0.1%, hitting 108.57 yen , while the common currency was intact on the day at $1.0732, having ridden the pound’s coattails to three-week peaks overnight.

 

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