The Pound Sterling hits two-week high as Brexit takes a step back

Pound Sterling

Sterling surged on Thursday, hitting a two-week high against the dollar, as concerns about the shape of politics in the United States and continental Europe gave the British currency a breather from Brexit worries.

The pound rose as much as 0.9 percent against the U.S. dollar in late afternoon trade in London, reaching $1.2561, its highest since Feb.9.

Concern that the British economy is finally showing signs of strains predicted since last June's vote to leave the European Union have pressured the pound over the past fortnight. But as nerves grow over economic policy in the United States and political stability in Europe, the dollar and euro have dipped, giving some respite to the battered pound.

The dollar fell broadly on Thursday, weighed down by a perceived lack of progress on U.S. tax reforms and public spending, while Wednesday's more-dovish-than-expected Federal Reserve meeting minutes also weighed on the greenback.

Sterling added half a percent to 84.36 pence per euro, close to a two-month high of 84.03 pence hit the previous day. That still left it over 9 percent weaker than its levels before the vote for Brexit.

Britain's House of Lords is still debating the bill that will trigger the UK's exit from the EU. The legislation is not expected to be blocked by the lords, but the government could be forced into making concessions as it lacks a majority in the upper house.

"We're really in a bit of a 'wait-and-see' phase with respect to the pound," saidJane Foley, a Rabobank currency strategist. She added that she thinks sterling’s movements this week was largely dollar motivated.

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