Sterling was up 0.37 per cent against the dollar at $1.2822. Despite the rise today, analysts expect the currency volatility to remain until the leadership crisis is over in Britain.
Latest reports suggest that Prime Minister Theresa May is likely to face a no-confidence vote next week with Conservative lawmakers expected to submit the 48 letters required to trigger a leadership contest today.
May could face the no confidence vote on Tuesday, Telegraph Chief Political Correspondent Christopher Hope said on Twitter, citing Brexiteer sources.
Fiona Cincotta from CityIndex also commented: “Given the high level of uncertainty any preparations for a worst-case hard Brexit outcome are being welcomed by the market as in the case of if Rolls Royce, which said it was making steps to ready itself for this type of scenario. In contrast, BT has got into a tangle with the UK telecom regulator over overcharging its phone and broadband customers and alongside Virgin Media has ended up being fined over £13 million for early exit fees at its subsidiary EE.
“For the moment the pound is holding against the euro and the dollar, up 0.08% and 0.21%, but given the lack of clarity on Brexit the UK currency market is set to remain volatile over the coming sessions.”