Investing.com - Sterling rallied on Tuesday and was on track for its largest one day gain since early 2009 following British Prime Minister Theresa May’s Brexit speech, while the U.S. dollar sank as investors digested comments by President-elect Donald Trump.
GBP/USD jumped 2.66% to 1.2369, rebounding from the low of 1.1985 hit on Monday, which was the weakest level since October’s flash crash.
It was the largest one-day gain in the pair since January 2009, during the global financial crisis.
In a speech in London, May confirmed that Britain will be leaving the single market when it exits the European Union, but would seek maximum access to it through a new trade agreement.
May also said the final Brexit deal will be put to parliament for a vote.
The pound surged higher against the euro, with EUR/GBP dropping 1.91% to 0.8633, retreating from Monday’s 10-week highs of 0.8851.
Sterling had received a boost earlier after data showing that U.K. inflation hit the highest since mid-2014 in December.
The Office for National Statistics said the annual rate of inflation accelerated to 1.6% in December from 1.2% in November and above forecasts for a gain of 1.4%.
Meanwhile, the greenback remained on the defensive after President-elect Donald Trump said the U.S. dollar was too strong.
In an interview published in the Wall Street Journal website on Monday Trump said U.S. companies could not compete with China "because our currency is too strong. And it's killing us".
In separate remarks, a senior adviser to the U.S. President-elect warned about the risk from a stronger dollar.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 1.04% to 100.47, the lowest level since December 8.
The dollar fell to fresh five-week lows against the safe-haven yen, with USD/JPY down 1.04% to 113.00.
The euro also gained ground, with EUR/USD climbing 0.88% to 1.0695.