Investing.com - Sterling edged higher against most major currencies on Wednesday, regaining some of Tuesday’s losses following the devastating terror attack in Manchester on Monday evening, which saw 22 dead and 59 injured, many of whom are under 16 years old.
GBP/USD was up 0.25% at 1.2992 by 09.30 GMT, up from the previous session’s close of 1.2959.
Following the deadly attack and reports of a higher than expected budget deficit, the pound failed to reach last week's 1.3000 mark against the dollar.
On Tuesday evening, Prime Minister Theresa May raised the terror threat level for the UK to ‘critical’, meaning attacks may be imminent.
In response to the increased terror threat level, the government deployed soldiers to key areas of the UK, to step up security.
Reports that the Manchester Arena suicide bomber had recently returned from Libya, and likely did not act alone, have increased the vigilance of security forces across the country. Meanwhile, political campaigning ahead of June 8’s general election was suspended until further notice.
The euro was down against the pound, despite Tuesday's positive euro-zone data, particularly from France and Germany. EUR/GBP was down 0.22% at 0.8610.
On Monday, the euro bounced higher after German Chancellor Angela Merkel called the euro “too weak.” The remarks came as investor focus has shifted back to the outlook for monetary policy.
The pound was back up against the safe-haven yen on Wednesday. GBP/JPY was 145.35, up 0.32% from the previous session’s close.
The dollar index, which measures the strength of the dollar against a trade-weighted basket of six major currencies, was steady at 97.25 by 09.10 GMT.
The Trump administration tax reform looks less likely following news reports last week on the administration’s suspected connection to Russia, impacting the dollar’s strength and seeing it reach six month lows last week.
Weak data on Tuesday also saw the dollar slip, although investors will be looking for news on the likelihood of June rate hikes from the Fed meeting minutes released at 18.00 GMT.
Thursday will also see UK inflation-adjusted Q1 GDP released at 08.30 GMT, along with data on capital expenditure by businesses in Q1, giving an indication of the performance of the UK economy in the first quarter.