Pound held at a 20-month low
The pound remained at a two-month low on Wednesday, weighted down by a broad-based rally in the dollar, fading hopes of a breakthrough in Brexit’s talks between the British government and the opposition.
The dollar index measuring the US currency against a basket of six main competitors, reached a 22-month high for a night.
British Prime Minister Theresa May told her top team of ministers on Tuesday that talks with the opposition Labour Party aimed at finding a way forward on Brexit are serious but difficult in some areas.
The pound edged 0.1% lower at $1.2920, its lowest level since Feb. 19. Versus the euro, the pound was broadly stable at 86.76 pence.
Some analysts see some reason for optimism, given that the deal with the EU to postpone Brexit at least until October has removed the imminent risk of Britain leaving the bloc without a deal.
“We are quite constructive about the outlook for the pound in the short term as a hard no-deal Brexit has been completely removed with the pound’s relative undervaluation becoming an attractive proposition,” said Nikolay Markov, a senior economist at Pictet Asset Management in London.