Investing.com - The pound pushed higher on Tuesday as investor confidence began to return to markets after recent sharp declines in the wake of the shock U.K. vote to leave the European Union last week.
GBP/USD was up 0.84% at 1.3337, coming off the 31-year low of 1.3122 set on Monday, a level not seen since 1985. The two-day selloff in sterling seen on Friday and Monday was the largest in recent history.
Global stock markets suffered the largest two-day rout ever, as a wave of selling wiped around $3 trillion from markets.
Ratings agencies Standard & Poor’s and Fitch Ratings both downgraded their credit ratings for the U.K. on Monday and warned that further cuts are possible.
S&P, the only major ratings agency to maintain a Triple A rating for the U.K., cut its rating by two notches to AA, warning that Brexit posed a risk to the constitutional and economic integrity of the U.K.
Fitch lowered its rating from AA+ to AA, forecasting an "abrupt slowdown" in growth in the short-term.
U.K. Prime Minister David Cameron was to travel to Brussels later Tuesday to discuss the Brexit vote with EU leaders.
The pound moved higher against the euro, with EUR/GBP down 0.32% at 0.8307, still not far from Monday’s two-year peaks of 0.8378.
The euro moved higher against the dollar, with EUR/USD climbing 0.42% to 1.1071, backing away from Friday’s three-month lows of 1.0909.
The euro remained under pressure as uncertainty over Brexit continued to cloud the outlook for the whole EU.
The traditional save haven currencies such as the yen and Swiss franc turned lower, though market sentiment remained fragile, with USD/JPY rising 0.17% to 102.17 and USD/CHF easing up 0.14% to 0.9798.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.33% to 96.23.