Investing.com - The dollar firmed up against a basket of the other major currencies on Tuesday, while sterling was trading near two-month lows as investors continued to fret over Brexit.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 101.99, off an intra-day low of 101.48.
The index has retreated since touching highs of 103.82 last week, the strongest level since 2002.
Demand for the greenback continued to be underpinned by expectations for higher interest rates this year.
The Federal Reserve raised interest rates in December and indicated that it expects to hike rates three more times in 2017.
Boston Fed President Eric Rosengren on Monday called for the U.S. central bank to step up the pace of interest rate increases, warning that inflation could overshoot its target if it does not.
GBP/USD touched lows of 1.2106, the lowest level since October 25 and was last at 1.2159, almost unchanged for the day.
Sterling was on track for its worst three day run since October after British Prime Minister Theresa May said Sunday that the country would not be keeping "bits" of European Union membership.
The remarks were seen as an indication that the UK won’t try to negotiate continued full access to the European single market when it leaves the EU.
The pound hit two-month lows against the euro, with EUR/USD rising as high as 0.8763, before pulling back to 0.8685.
The euro retraced gains against the firmer dollar, with EUR/USD dipping 0.11% to 1.0562.
The dollar pushed higher against the yen, with USD/JPY rising 0.17% to 116.19, having fallen to overnight lows of 115.2 as markets in Japan reopened after a holiday on Monday.
Elsewhere, the Turkish lira fell to fresh record lows against the dollar a day after ratings agency Moody's said that bank profits will be hit by an increase in bad loans this year and warned of a "general worsening" in the investment climate in the country.
USD/TRY climbed 1.69% to trade at 3.7776 after starting the day at 3.7135.