FX round-up: Sterling up on MPs securing Brexit vote, BoE rate-hike patter

Sterling turned in a positive performance on most key crosses as traders took mild to moderate heart from news parliamentarians will get to vote on a Brexit deal before the European parliament.

At about 16:45 GMT, sterling was up 0.04% to $1.2474 and off earlier weakness that saw it languishing at a two-week low. It was up 0.59% to €1.1666.

The pound also rose on the Australian, New Zealand and Canadian dollars, as well as South Africa's rand and Japan's yen.

That MPs would get to vote on the EU withdrawal arrangements and the future relationship with the EU saw sterling's fortunes improve, said SpreadEx analyst Connor Campbell.

It was also aided by comments from Bank of England's Kristin Forbes who believed a rate hike might be need to prevent inflation from getting too unwieldy, noting the central bank's target of 2%.

Michael Hewson, chief market analyst at CMC Markets UK, said Monetary Policy Committee-member Forbes' words had helped the pound rally, but also sounded a note of caution.

"The timing of the remarks is a little odd, coming as they do so soon after last week's dovish inflation report where she signed off on the continuation of the current QE programme, that she voted against in August," said Hewson.

"It is this sort of inconsistent messaging that does so much to damage the Bank of England’s credibility when it comes to its forward guidance."

ETX Capital senior market analyst Neil Wilson said it was already known that BoE had a finite tolerance for inflation overshooting its target.

"All eyes are on the Valentine’s Day inflation readings for the UK next week," he said.

"All told it's been pretty choppy for cable today after the dollar was bid up to its boots earlier in the session.

"After all that it's as you were -- no material shift and nothing meaningful that we didn't know already."

Meantime, the dollar turned in an overall strong performance on major crosses on Tuesday, being up on commodity units the aussie, loonie, kiwi and saffa, as well as the yen.

Hewson said this followed US Philadelphia Fed President Patrick Harker keeping open the option of a March rate rise in the US, it having been previously priced out by the market.

"This apparent hawkishness is rather surprising, given last week's rather weak wages data, but the comments did come with some caveats, with respect to the performance of the US economy.

"It would still be a surprise if the Fed were to move in March in the absence of any further detail from President Trump about his fiscal plans," said Hewson.