Pound up as traders bet on Brexit deal
Sterling leapt to a 10-week high yesterday after Britain's opposition Labour Party said it would back an attempt by lawmakers to prevent a disorderly no-deal Brexit.
The United Kingdom is due to leave the European Union on March 29 but has no approved deal on how the divorce will take place.
Still, the pound is rallying as investors bet that a no-deal Brexit - the worst case scenario for the currency - can be avoided if parliament exerts greater control over the process.
"Overall the view is parliament doesn't want a hard Brexit and nor does the EU ... and if that's the case I don't see how it can happen," said Justin Onuekwusi, a fund manager at Legal & General Investment Management.
"We are neutral on sterling as you have to be quite nimble," he added.
But sterling is unlikely to continue rallying simply on the basis of a delayed Brexit, said Thu Lan Nguyen, an FX strategist at Commerzbank in Frankfurt.
"Delaying is far from finding a solution ... hard-line Brexiteers would never tolerate an indefinite delay of the EU exit," she said.
Elsewhere, global stock markets recovered from earlier losses as investors made a cautious return to riskier assets, with US futures and European stocks higher even as worries about corporate and economic growth lingered.
Trading was choppy as hopes of more stimulus measures from China to shore up its economy offset worries over progress between Washington and Beijing in resolving their trade spat.
The MSCI world equity index, which tracks shares in 47 countries, was back in positive territory around midday in London.
US futures pointed to a positive start for Wall Street after the heaviest losses in nearly three weeks in the wake of disappointing earnings.
Pan-European stocks were up 0.4pc at 13.22 GMT. In Dublin the Iseq was up 1.12pc, with AIB and Bank of Ireland both seeing very strong gains.
Global shares continue to see-saw on trade war fears.
The main driver of yesterday's early share sell-off was a 'Financial Times' report that Washington had rejected an offer from Beijing for preparatory trade talks ahead of high-level negotiations scheduled for next week.