Investing.com - The dollar pulled away from three-week lows against a currency basket on Wednesday as sterling gave back some of the previous session’s strong gains made after British Prime Minister Theresa May called for early elections.
Sterling hit the highest levels against the dollar in six months on Tuesday amid expectations that May will win a substantial majority in the elections, securing her position ahead of talks with the European Union about the terms for Brexit.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged up 0.11% to 99.52, backing off an overnight low of 99.36, the weakest since March 28.
GBP/USD dipped 0.14% to 1.2823 after going as high as 1.2904 on Tuesday, the most since early October.
The dollar pushed higher against the yen, with USD/JPY rising 0.23% to 108.67.
Concerns over geopolitical tensions with North Korea along with lackluster U.S. economic reports continued to weigh on the dollar.
U.S. Vice President Mike Pence on Tuesday reassured Japan and other U.S. allies of Washington’s commitment to reining in North Korea's nuclear and missile ambitions after its failed missile test over the weekend.
Data on Tuesday showed that U.S. housing starts fell in March, likely due to bad weather, while building permits rose.
A separate report showed that U.S. industrial production rose last month, but manufacturing production unexpectedly fell.
The euro edged lower, with EUR/USD slipping 0.1% to 1.0719.
Investors were continuing to monitor political developments ahead of the upcoming French presidential elections as the race tightened after a surge in polls for far-left candidate Jean-Luc Melenchon, who wants a referendum on the country’s European Union membership.
Markets have long since been anxious about front runner Marine Le Pen, leader of the far-right National Front party, who also wants to put the country’s EU membership to a vote and abandon the euro.
The euro was little changed against sterling, with EUR/GBP at 0.8353, after falling as low as 0.8312 on Tuesday, the lowest trough since December 5.