Sterling sentiment was hampered by fading expectations that the government and Labour Party could secure a Brexit compromise.

US data was strong enough to trigger further doubts whether the Federal Reserve would cut interest rates this year which triggered US support.

The US currency was also boosted by a lack of confidence in other major currencies with the dollar trade-weighted index close to 2-year highs as EUR and GBP stumbled again.

US equities posted gains with the S&P 500 index posting a record closing high. Asian equities overall failed to respond, but the Australian market hit an 11-year high.

Oil prices posted fresh 6-month highs with Brent above $74.50 p/b before correcting after a larger than expected API inventory build.

The Australian dollar declined sharply after lower than expected first-quarter inflation data boosted expectations of a Reserve Bank rate cut.

Sterling pushed higher ahead of the New York open with a strong tone in oil prices providing support. GBP/USD moved above 1.3000 while GBP/EUR retreated to below 1.1520 as buying interest faded.

Wider dollar strength triggered a reversal in New York trading with a GBP/USD slide to 2-month lows below 1.2950. Sterling also lost ground against other majors with GBP/EUR moving back towards 1.1520. The UK currency was unable to gain support from further gains in oil prices and a more optimistic tone towards the global economy.

Sterling sentiment was hampered by fading expectations that the government and Labour Party could secure a Brexit compromise. There was also strong pressure on Prime Minister May to resign with markets uneasy over the threat of a General Election. Business surveys also indicated that confidence remained fragile due to political uncertainty. Sterling was unable to make headway on Wednesday as GBP/USD held below 1.2950 amid on-going UK political concerns.

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