FX round-up: Pound gains as PM pushes for end to Brexit talks with Labour

Sterling strengthened on Tuesday, as traders played it safe ahead of the US central bank's policy announcement the next day and on the back of reports that the government was aiming for closure in talks with Labour.

Versus the euro, as of 1858 BST the pound was adding 0.54% to 1.1628 while against the Greenback it jumped 0.84% to 1.3046, climbing atop the 1.30290 mark for the first time in nearly a fortnight.

Citing a person familiar with the Prime Minister's thinking, Bloomberg reported that the government was planning one last big meeting with Labour aimed at breaking the current impasses.

In parallel, the US dollar spot index was off by 0.36% to 97.50 and euro/dollar was up by 0.29% to 1.12178, with the former remaining within a whisker of its 52-week highs.

Helping the euro was news earlier that bloc's economy expanded at a quicker-than-expected quarter-on-quarter pace of 0.4% in the first three months of 2019.

To take note of, there was also a fair amount of talk in markets around an increasing trend for foreign investors in the States not to hedge their exposure to the US dollar and thus feeding the currency's appreciation.

Meanwhile, and as regards the Federal Reserve's policy announcement the nex day, no changes in policy were anticipated on Wednesday but there was an ongoing debate on trading floors as to whether a rate cut was on the cards for later in the year.

The most recent polls conducted by Reuters and Bloomberg showed few economists were anticipating such a move and yet Fed funds futures were pricing in just under 70% odds of a cut at the December FOMC.

For some observers, that divergence had to do with expectations for less potent stimulus from Beijing this time around, possible weakness in emerging markets and, intertwined with such concerns, amongst others, the risk of undue strength in the US dollar going forward.