Sterling rose sharply on Wednesday, rebounding from a 20-month low as British Prime Minister Theresa May passed a no-confidence vote challenging her leadership within the Conservative Party, thus continuing her efforts to save her European withdrawal agreement.
The euro rose against the dollar after Italy's revised budget proposal to the European Union eased the debt burden.
The dollar index fell below Tuesday's and nearly a month's high.
Teresa May passed a no-confidence vote in her party Wednesday, with two-thirds of Conservative Party members supporting her. But it is unclear whether she can get the withdrawal agreement passed in Parliament. Analysts said this could reignite the pressure on Sterling sales.
In the absence of support, Teresa May postponed a parliamentary vote on the withdrawal agreement on Monday, and she must now try to secure assurances from EU leaders to persuade British parliamentarians.
"So the British Prime Minister and the pound don't seem to be out of the woods," said Joe Manimbo, senior market analyst at Western Union Business Solution in Washington.
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