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LONDON: Sterling jumped against the dollar on Friday, as most majors fought back against the greenback’s recent strength, capping a volatile week in which the pound hit a 35-year low, Britain saw a new prime minister, and Queen Elizabeth passed away.

The pound rose over 1% in early London trade to as much as $1.1646, its highest level this month, it later pared gains and was last up 0.7% at $1.158.

Sterling’s moves against the euro were much more muted. The euro was a whisker lower at 86.81 pence.

“Today it’s a dollar story, and we are seeing the pound trade in line with that broader theme” said Simon Harvey, head of FX analysis at Monex Europe.

The euro at one point was also up 1% on the dollar to a three-week top, with the Japanese yen, the Australian dollar Swiss franc and Canadian dollar also posting large gains on the greenback, though all later gave some of those back.

The yen and euro have all recently hit multi-year lows versus the dollar this week, and sterling fell as low as $1.1407 on Wednesday, its lowest since 1985.

“We’re finally seeing central banks pushing back against this stronger dollar narrative, and we’re starting to see fiscal authorities responding to the causes of it especially in Europe,” said Harvey.

He pointed to a stronger fixing for the Chinese yuan early in the day, more aggressive comments from Bank of Japan officials on the yen’s recent slump, more fiscal support in Europe and Thursday’s hawkish ECB meeting with an unprecedented 75 basis point hike.

Britain’s new Prime Minister Liz Truss contributed to the broader narrative of action from European governments on Thursday, announcing a plan to cap consumer energy bills for two years and funnel billions to prop up power companies.

Investors are still waiting to see specific details of how the plan will be financed, as well as seeing how Truss and her new government will handle a very difficult situation with surging inflation and a slowing economy.

The death of Queen Elizabeth on Thursday has heightened the uncertain state of affairs in Britain.

The Bank of England on Friday postponed next week’s interest rate decision following the queen’s death, its first delay to a monetary policy meeting since the central bank became operationally independent 25 years ago.

Analysts at BMO Capital Markets said the postponement, as well as a rise in oil prices were behind sterling’s fall back below $1.16.

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