Sterling bounced as much as 0.7% versus the dollar and euro on Wednesday, enjoying a respite after four days of falls that took it to the lowest in more than two and a half years.
Analysts attributed the recovery to some end-month portfolio re-adjustments, coupled with the fact that a no-deal Brexit isn’t still fully priced into the British currency.
“We are just seeing some stabilisation after very bad four days,” said Lee Hardman, FX strategist at MUFG.
The pound was last up 0.7% at $1.2224 and at 91.15 pence versus the common currency. Earlier this week it fell to a 28-month low of $1.2120.
“(The bounce) doesn’t change the bigger picture and the pound will contine to weaken but clearly it won’t be a one-way street,” Hardman added.