The pound was higher against its most major counterparts in the early European session on Wednesday, as investors await a confidence vote on U.K. Prime Minister Theresa May by Britain's parliament tonight, following a crushing defeat on her Brexit deal on Tuesday.

The motion is expected to be defeated, as all Conservative and DUP MPs are expected to support the government and give May her slim majority in Parliament.

With support for a no deal Brexit appearing quite low in parliament, markets are now pricing in a higher probability of a softer or ditched-Brexit altogether.

While European Commission chief Jean-Claude Juncker urged London to "clarify its intentions as soon as possible", May promised cross-party talks to try and salvage a workable Brexit deal before returning with a new proposal next Monday.

Data from the Office for National Statistics showed that UK consumer price growth slowed to its weakest level in nearly two years in December, driven by a big fall in fuel prices.

The consumer price inflation eased to 2.1 percent from 2.3 percent in November, in line with economists' expectations.

The input price inflation dropped to 3.7 percent form 5.3 percent in November, in line with economists' expectations. Output price inflation eased to 2.5 percent from 3 percent and was lower than the 2.9 percent economists had predicted.

The currency fell against its key counterparts in the Asian session as a crushing parliamentary defeat for British Prime Minister Theresa May's Brexit plan reignited worries about global growth. The pound added 0.8 percent to 140.07 against the yen, from a low of 138.99 hit at 8:30 pm ET. On the upside, 142.00 is likely seen as the next resistance for the pound.

Data from the Bank of Japan showed that Japan producer prices fell 0.6 percent on month in December - missing forecasts for a decline of 0.3 percent, which would have been unchanged from the previous month.

On a yearly basis, producer prices were up 1.5 percent - shy of expectations for 1.8 percent and down from 2.3 percent in November.

The pound firmed to 1.2748 against the Swiss franc, its biggest level since December 5, 2018. If the pound rises further, 1.29 is possibly seen as its next resistance level.

Reversing from an early low of 1.2825 against the greenback, the pound edged up to 1.2896. The pound may possibly challenge resistance around the 1.30 area.

The pound appreciated to near a 2-month high of 0.8843 against the euro and held steady thereafter. The pair was worth 0.8874 at yesterday's close.

Looking ahead, U.S. import and export prices for December and NAHB housing market index for January are scheduled for release in the New York session.

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