Pound turns around after best day since 1990s

Sterling dropped back on Wednesday after making its biggest one-day gain since at least 1998 on Tuesday as Prime Minister Theresa May outlined Britain's hopes for its exit from the European Union.Sterling sliced almost 1 percent off the 3 percent surge it had made against the dollar on Tuesday, leaving it back at $1.23. It topped out at $1.2416 the previous day, having been as low as $1.1983 on Monday.
May confirmed on Tuesday that she planned to take Britain out of the EU's single market, but cheered currency markets by including promises to let parliament have a say on its Brexit deal and give firms time to transition to the new set-up.
Asset manager GAM's group head of multi asset portfolios Larry Hatheway said the message had been well-received because it sought solutions rather than a confrontational approach. But there remains huge uncertainty over where the talks will lead.
"I don't think sustained rallies in the pound are likely," he said. "My sense is that we are going to challenge the $1.20 level before too long again, and 1.15 is not out of the question, but there won't be the kind of weakness (for the pound) that we saw in the second half of last year."
Britain's Brexit minister said in a radio interview that other EU countries had welcomed May's comments on Tuesday and that he and his colleagues would seek a trade deal where customs arrangements were "as frictionless as possible".
The slip back in sterling came amid fresh proof of the affect of the looming split. HSBC, the UK and Europe's biggest bank, said it will move staff responsible for generating around a fifth of its UK-based trading revenue to Paris.
"We will move in about two years time when Brexit becomes effective," Chief Executive Stuart Gulliver said.
UK jobs market figures also showed the number of people in work in Britain fell for a second time in a row in the three months to November, the latest suggestion that the Brexit vote may be making employers nervous about hiring.
In line with the day's broader pullback, sterling dipped 0.6 percent against the euro to leave it at 86.80 pence per euro. It had hit 86.27 pence on Tuesday after weakening to as little as 88.53 pence on Monday.
It fell against the yen and Swiss Franc
too and gauges of expected sterling volatility nudged back up. One-week options were at 7.8 percent albeit well below the 17.5 percent level it jumped to at the start of the week.