Pound Edges Higher as PM May Faces No-Confidence Vote

Investing.com - The British pound edged higher on Wednesday, following news that Prime Minister Theresa May will face a vote of no-confidence from members of her own Conservative party later in the session.

The pound was on the front foot, with GBP/USD was up around 0.4% at 1.2535 by 3:55AM ET (08:55 GMT), after dropping to as low as 1.2478 overnight, its weakest since April 2017.

The pound was also higher against the euro, with EUR/GBP down about 0.3% at 0.9033.

Brexiteers within May's party have reached the threshold of support they need to trigger a no-confidence vote in the prime minister, according to Graham Brady, chairman of the Conservative Party's 1922 Committee, a group of influential backbench members of parliament.

The vote is scheduled to take place Wednesday evening between 6:00PM and 8PM London time.

Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was little changed at 97.33.

Global financial markets will also pay close attention to U.S. consumer price inflation data later in the day for additional insight into the outlook for monetary policy in the months ahead.

The Federal Reserve is widely expected to announce its fourth rate hike of 2018 next week, but investors are beginning to question how many increases it can implement next year.

While policymakers have pointed to three increases in 2019, the market is starting to bet the U.S. central bank may halt its rate hikes altogether next year.

Meanwhile, investors will be keeping abreast of the ongoing trade spat between the U.S. and China to see if any more news materializes.

Washington and Beijing have been engaged in a trade dispute for the most part of the year, with both countries slapping tariffs on several of each other's products.

-- Reuters contributed to this report

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