Investing.com – The pound was trading close to seven month lows on Wednesday as Prime Minister Theresa May’s government faced another crunch vote on Brexit.
GBP/USD hit a low of 1.3148, a level not seen since November 16 and was trading at 1.3157 by 05:44 AM ET (09:44 AM GMT), off 0.14% for the day
The House of Commons was to vote on the EU withdrawal bill, the government’s flagship piece of Brexit legislation, later in the day.
The government is seeking to defeat an attempt to give MPs a “meaningful vote” before Britain could leave the EU without a deal.
The vote is coming at a time of growing investor nervousness that Brexit negotiations could fail to reach an agreement.
Sterling was little changed against the euro, with EUR/GBP last at 0.8789.
Market sentiment remained cautious as concerns over a heated trade spat between the U.S. and China lingered on.
Fears over trade tensions mounted on Tuesday after Beijing warned that it would retaliate swiftly after U.S. President Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese imports.
The moves exacerbated worries among investors that the world’s two largest economies could descend into an all-out trade war.
Uncertainty over the future of the North American Free Trade Agreement and concerns over tariffs that the Trump administration has imposed on European trading partners also added to investor nerves.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.17% to 94.81, not far from Friday’s eleven-month high of 95.13.
The dollar firmed up against the yen, with USD/JPY inching up to 110.12, pulling away from Tuesday’s more than one-week lows of 109.54.
The Japanese currency is often sought by investors as a safe haven in times of geopolitical tensions and market turmoil.
The euro remained lower against the dollar, with EUR/USD slipping 0.2% to 1.1565 a day after European Central Bank President Mario Draghi reiterated that monetary policy will remain persistent, prudent and patient in the wake of the bank’s dovish guidance on interest rates last week.