Amid Brexit uncertainty the Pound holds steady

The British pound was holding steady on Wednesday, recovering some poise in the wake of a fall overnight after parliament forced a delay in the U.K. government’s Brexit plans.

Sterling slipped as low as 1.2841 overnight before pulling back to 1.2878 by 04:17 AM ET (08:17 GMT). That left the pound more than one cent off Monday’s five-and-a-half-month high.

Against the euro, the pound was a touch lower at 0.8645 following a 0.5% decline in the previous session.

On Tuesday, parliament opposed British Prime Minister Boris Johnson’s three day timetable for passing Brexit legislation. The stage now looks set to push for a general election before Christmas to break the impasse.

It is up to the EU to decide whether to extend Britain’s Oct. 31 deadline for its departure.

Adam Cole, a strategist at RBC Capital Markets, said Brexit was driving a “general risk-off tone”.

“Things could change very quickly today, depending on the EU response,” he said. He added that he did not see “much downside” risk now that a no-deal Brexit was off the table.

Morten Lund, a senior strategist at Nordea, said that markets were reacting to the likelihood of a U.K. election.

The dollar hit a low of 108.25 against the safe haven Japanese yen overnight, the weakest since Oct. 15 and was last at 108.38.

Away from Brexit, investors are also closely watching for signs of a thaw in the U.S.-China trade war, which has proven to be a big risk to financial markets and global economic growth.

The euro was little changed at 1.1122 before Thursday’s European Central Bank meeting, outgoing President Mario Draghi’s final policy meeting.

The U.S. dollar index was flat at 97.25, holding on to a 0.2% gain posted on Tuesday.forex.com

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