Sterling, euro rebound for 2nd day on reduced Brexit anxiety

Japanese yen banknotes of various denominations
Kiyoshi Ota | Bloomberg | Getty Images
Japanese yen banknotes of various denominations

The U.S. dollar slipped against the euro and sterling for a second straight day on Wednesday on potential profit-taking and a rebound in risk appetite stemming from reduced concerns surrounding Britain's vote to exit the European Union.

Sterling, which suffered its biggest one-day fall in modern history on Friday, was last up 0.7 percent against the greenback at $1.3434. That marked roughly a 3-cent rebound from a 31-year low of $1.3122 touched on Monday, when the currency extended its more than 17 cent decline over a two-day period following the Brexit vote.

"People are getting less worried about Brexit," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York. "There is a lot of opinion in the UK about this taking a lot of time."

The euro was last up 0.33 percent against the dollar at $1.1101, rebounding further from a 3-1/2-month low of $1.0909 on Friday. Analysts said traders were relieved by the prospect of prolonged negotiations among European policymakers before the UK's divorce from the EU.

The dollar index, which measures the greenback against a basket of six other major currencies, was last down 0.46 percent at 95.81 after hitting a more than 3-1/2-month high of 96.705 on Monday.

Riskier commodity-linked currencies such as the Australian and New Zealand dollars gained, with the Aussie last up 0.66 percent at $0.7436 and the kiwi up 0.77 percent at $0.7098.

The EU's 27 member states, excluding Britain, will meet in Brussels today following Tuesday's summit with the British prime minister, to discuss how to respond to the Brexit vote. They are expected to launch a period of reflection, culminating in a set of EU reform proposals to be unveiled by next March.

Traders were likely taking profit on short bets against sterling and the euro, partly on the fact that Britain had not started the formal process of quitting the EU by invoking Article 50 of the Lisbon Treaty, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Analysts said uncertainty remained and sterling had further room to fall. The dollar, which sank against the safe-haven yen after the Brexit vote, was last down just 0.11 percent at 102.86 yen.

The dollar was last down 0.21 percent against the Swiss franc at 0.9799 franc.