Investing.com - The pound gained ground on Monday ahead of a UK parliamentary debate on changes to Brexit legislation as investors expected Britain's lower house of parliament to throw out changes made by the upper house last week.
GBP/USD advanced 0.46% to 1.2224 by 12.04 GMT, pulling away from last week’s eight-week trough.
Investors hoped that lawmakers would remove amendments inserted into the Brexit legislation by the House of Lords last week, which give parliament the right to veto Prime Minister Theresa May’s eventual deal.
This would remove some of the uncertainty surrounding the Brexit negotiations.
Meanwhile, speculation mounted that May could trigger Article 50 of the Lisbon Treaty on Tuesday, to formally begin the two-year process of exiting the European Union.
Scotland’s First Minister Nicola Sturgeon said Monday she will ask the Scottish parliament to vote next on week on whether to hold a second independence vote.
The pound was also higher against the euro, with EUR/GBP was down 0.57% to 0.8730, bouncing off the eight-week highs of 0.8786 hit overnight.
Sterling was also supported by some weakness in the dollar ahead of the outcome of the Federal Reserve’s two-day policy meeting on Wednesday, with a rate hike almost fully priced in by markets.
Friday’s U.S. nonfarm payrolls report for February did little to alter expectations for a rate increase this week.
The Department of Labor reported that U.S. employers continued to hire workers at a solid pace last month and wages also rose, albeit at a slower pace than some economists had expected.
Futures traders are pricing in around a 90% chance of a hike at the Fed meeting, according to Investing.com’s Fed Rate Monitor Tool.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.28% at 101.1, after falling to two-week lows of 100.86 overnight.