The pound rose as much as 0.7 percent to $1.333, the highest level since July 4, and was 0.5 percent stronger at $1.3313 as of 7:03 a.m. Wednesday in London. The British currency continued its longest rally in two months, climbing for a fourth day and rebounding from a 31-year low resulting from last month’s Brexit referendum.
Theresa May is scheduled to assume position as U.K. prime minister later Wednesday and economists expect the Bank of England to lower interest rates Thursday which should cap the pound’s advance.
According to Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo, “The pound is supported by views that May won’t rush to begin the process toward the exit, reducing concerns about immediate negative consequences. The removal of political uncertainty is bringing back some sense of stability after the post-Brexit turmoil.”
Asia Markets Advance
The lessening of concerns over the UK political situation as well as a rally on major U.S. indexes helped Asia markets to advance Wednesday. In Japan, Prime Minister Shinzo Abe's landslide victory in upper house elections over the weekend and his promise of new financial stimulus spending helped to boost Japanese stocks, pushing the Nikkei 225 up 135.78 points, or 0.84 percent, at 16,231.43 and extending Monday and Tuesday's combined 6.5 percent rally.
The prospect of fresh stimulus programs helped to weaken the Japanese yen, with the dollar fetching 104.29 yen on Wednesday after trading near the 100 level late last week. The currency pair was off an earlier high of 104.88.