The dollar eased slightly versus other major currencies on Monday after Federal Reserve officials expressed caution over the global growth outlook, prompting traders to reassess the pace of future U.S. interest rate increases.
The pound found some solace on Friday after a leading eurosceptic minister pledged support for Britain’s embattled premier Theresa May, who struck a defiant tone despite strong opposition to her Brexit deal.
Foreign exchange derivatives indicate markets are bracing for a fresh round of volatility in sterling, with investors ramping up purchases of options giving them the right to sell sterling if Brexit uncertainty escalates.
The dollar fell broadly on Friday in the wake of cautious comments from two U.S. Federal Reserve officials about global economic growth, while sterling rose following losses tied to fears about a Brexit deal.
Sterling hit a 7-month high versus the euro and rocketed beyond $1.30 on Tuesday after the United Kingdom and European Union agreed on the text for a Brexit divorce deal.