The pound continued to trade lower against a basket of global currencies on Wednesday (28 September) in the absence of major guiding macroeconomic indicators and Foreign Secretary Boris Johnson's latest quip that Brexit talks were likely to start early next year.
At 1.02pm BST, the pound was changing hands versus the dollar and euro at $1.3012 and €1.16050, down 0.08% and 0.02% respectively. Earlier in the session, the YouGov/Centre for Economic and Business Research (CEBR) consumer confidence index climbed to 111.1 from 110.1 in August.
The index has increased by 4.5 points since its plunge in July following the Brexit vote, but is still short of the 113.6 score recorded before the referendum in May. A score above 100 means more people are optimistic than pessimistic.
The pound fell sharply on Friday (23 September), dipping below the $1.30 threshold, after Johnson suggested the UK will start formal Brexit negotiations early next year.
"By the early part of next year, you will see an Article 50 letter which we will invoke and in that letter I am sure we will be setting out some parameters for how we propose to take this forward," the foreign secretary told Sky News.
Meanwhile, with major US data releases coming in stronger than expected, as the Markit flash PMI services index for September rose to 51.9 from 51.0 in August, and a further increase in September consumer confidence to 104.1 from an upwardly-revised 101.8 the previous month was recorded, the dollar rallied.
At 1.28pm BST, the greenback was up 0.17% and 0.05% versus the Japanese yen and the Swiss franc, changing hands at JPY100.60 and CHF0.9710 respectively. However, the euro did not fall in line registering a 0.12% gain versus the dollar instead to change hands at $1.1228.
FXTM research analyst Lukman Otunuga said dollar bulls received a lifeline overnight following publication of data which elevated sentiment towards the US economy.
"As of late, the dollar has been pressured by the diminishing expectations over the Federal Reserve raising US interest rates in 2016 but Tuesday's data provided somewhat of a lifeline. With the visible Fed divide amplifying the dollar sensitivity, more explosive moves could be observed in the future. Although sentiment remains somewhat bullish towards the dollar, further positive domestic data may be needed for the Fed to justify raising US rates in December."