Investing.com - Sterling rallied on Tuesday and was on track for its largest one day gain since 2008 after British Prime Minister Theresa May said the U.K. was looking for a Brexit deal which would benefit both sides.
GBP/USD jumped 2.33% to 1.2328, 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 June 20 last year, just ahead of the referendum and the second biggest since December 2008.
In a speech in London, May confirmed that Britain will be leaving the single market, but said it would seek a bold, ambitious trade agreement with the EU.
She said an important part of the new relationship will be “the greatest possible access to the single market on a fully reciprocal basis”.
May said she wants to deliver a Brexit that works for the whole U.K., announcing that the final Brexit deal will be put to both houses of parliament for a vote.
May said that it is in Britain's national interest for the EU to succeed and that she wants post-Brexit Britain to be stronger, fairer, more united and more outward-looking than ever before.
The prime minister also said workers’ rights will be maintained under Brexit and added that she wants to guarantee the rights of EU nationals in Britain, and Britons living in Europe, as soon as possible.
The pound also surged higher against the euro, with EUR/GBP dropping 1.49% to 0.8670, 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 dollar remained on the defensive after a senior adviser to U.S. President-elect Donald Trump 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 0.92% to 100.58, the lowest level since December 8.