FX round-up: Cable finally gets a reprieve

Cable managed to swim against the tide of US dollar strength as traders continued to react to comments by Fed vice chairman Stanley Fischer over the past weekend referring to the decision to stay put on rates on 21 September as "close".

Versus the US dollar the pound rose from 1.2122 to end at 1.2207, having hit an intra-session high of 1.2327.

In parallel, the spot US dollar index tacked on 0.28% to the previous session´s gains, closing at 97.966.

May allowed Tory MPs to vote for a Labour motion calling for greater scrutiny of her proposals in Britain’s exit from the European Union. However, she ruled out letting parliament vote on whether to trigger Article 50, the formal Brexit procedure.

May has said she will invoke Article 50 by the end of March.

“Investors haven’t appreciated operating in the dark over the UK’s Brexit terms,” said Jasper Lawler at CMC Markets. “The prospect of a bit more transparency from Theresa May could mark the beginning of more stable trading in the pound.”

Bank of England official John Cunliffe also tried to soothe worries about Brexit by saying it is “highly unlikely” that major financial institutions will move to European cities once Britain leaves the EU.

Speaking at the House of Lord’s EU Affairs Sub-Committee on Wednesday, the Deputy Governor for Financial Stability also warned that government negotiations in trying to keep passporting rights will be a difficult progress.

The minutes of the Fed´s last policy meeting also helped to nudge the greenback higher.

They revealed a still divided group of policymakers, although several of those who opted to stay put believed it had been a "close call" while "some" believed it would be appropriate to tighten "relatively soon" if the jobs market and the economy continued to strengthen.

Dollar/yen continued to gain altitude, rising from 103.50 to 104.20.

Euro/dollar on the other hand dropped from 1.1054 to 1.1007 despite data showing that euro area industrial output expanded at a 1.6% month-on-month pace in August (consensus: 1.2%), although analysts at BNP cautioned that data over the summer tended to be quite volatile.