Investing.com - The British pound edged lower in early European hours on Thursday, easing off Wednesday's nine-month high posted after U.K.lawmakers voted emphatically against leaving the EU without a transitional deal.
The pound was down 0.2% at $1.3317 by 4:45AM ET (08:45 GMT), after rallying 2.1% a day earlier.
The currency went as high as $1.3380, a level not seen since June 2018, after parliament's vote, which paves the way for a vote later Thursday that could delay Brexit until at least the end of June.
"Yesterday’s vote to reject a no-deal Brexit does not remove the risk of a disorderly Brexit on March 29," Singapore's DBS said in a note. "Hence, the pound's appreciation yesterday is still set on shaky and not on firm foundation."
Analysts said the real test for sterling was yet to come as lawmakers still need to agree a way forward before an extension on Britain's exit could be obtained from the EU.
"If they manage to achieve cross-party support for a deal, likely a 'softer Brexit' sort of a deal – this could potentially be very good news for UK assets," said Russel Silberston, Co-Head of Multi Asset at Investec Asset Management.
"If Parliament fails to come to an agreement, it would go to a second referendum. My concern is that this would call into question the role of Parliament and could have serious future political consequences," Silberston added.
Meanwhile, the U.S. dollar index against a basket of six major currencies was steady at 96.52 after falling to a two-week low of 96.34 a day earlier after data showed U.S. producer prices rose at a slower-than-expected pace in February.
The report reinforced expectations the Federal Reserve will stay patient on rates and could even sound more dovish at its policy meeting next week.
Against the Japanese yen, the greenback gained 0.5% at 111.68.
The euro paused after four straight sessions of gains took it to the highest since March 5. It was last at $1.1328.
Elsewhere, the Australian dollar slipped 0.35% to $0.7066 as a largely lackluster batch of economic data from the country’s major trading partner China weighed.
Data released earlier showed China’s January-February industrial output growth slipped to their slowest pace in 17 years.
-- Reuters contributed to this report