FX round-up: Sterling gains as market mulls Fed boss Yellen's dovish words

Sterling made heady gains on most crosses amid a market coming to grips with US Federal Reserve chair Janet Yellen's latest rates comments and the lingering Brexit debate.

At 17:05 BST, sterling was up 0.82% to $1.4561, with cable levels around $1.4500 pivotal and potentially acting as both technical support or resistance.

Sterling was ahead 0.86% to €1.2830, perhaps helped by a wider-than-expected French trade deficit for April. It advanced against the commodity units, barring a stronger aussie.

An opinion poll out today -- this one by The Telegraph/ORB -- revealed 52% of Britons favoured remaining in the European Union, against 40% who wanted to leave.

This result was at odds with others. On Monday, Digital Look reported that the most recent Observer/Opinium, YouGov/ITV and TNS polls revealed more Britons favoured leaving the EU.

"Bulls or Bears could take control at any moment with the rapidly changing polls installing both camps with inspiration," said FXTM analyst Lukman Otunuga.

Spreadex financial analyst Connor Campbell added that sterling's performance was in contrast to its pummelling yesterday.

"It appears this rebound is due to a mixture of Yellen's dovish comments last night, and a new poll from The Telegraph and ORB showing that, while Vote Leave are gaining ground, the Remainers still just about have the lead," Campbell said.

Last night in Philadelphia, Yellen flagged the potential for gradual US rate rises, and followed shock US non-farm payrolls data last week.

Her comments followed three other Fed officials' words that appeared to have a dovish hue, and a bias towards scrutinising upcoming data sets closely.

US data out so far today was mixed -- the IBD/TIPP Economic Optimism Index below forecasts, non-farm business sector labour productivity was in line, and unit labour costs were ahead.

In sum, markets have tended to interpret these as suggesting a rates hike might not occur in June, but perhaps in July. Some pundits were even looking as far out as September.

Unsurprisingly, bears pushed the dollar-index spot price down 0.01% to $93.892, below the key $94.00 level. The dollar was flat against the euro, but lost ground against the commodity currencies and the yen.

"This (dollar-spot) index has turned bearish in the blink of an eye and may be poised to decline lower if Q2 concludes without any action taken by the central bank," Otunuga contended.

"If the next non-farm payrolls report for June displays signs of improvements then a rate hike in September could be a live possibility," he added.