Sterling hovered near a three-month high on Friday, brushing off fresh talk of a Scottish independence referendum that could wrench apart the United Kingdom after Brexit.
The euro retreated on Thursday after briefly hitting a near three-month high against the dollar as concerns about rising coronavirus cases in Europe grew.
The safe-haven dollar sank to a fresh 2-1/2-year low in choppy trading on Wednesday, pressured once again by expectations of further fiscal stimulus for the United States.
Sterling fell to a one-month low against the euro and also dipped momentarily below $1.33 on Wednesday as Britain and the European Union quickly approached a make-or-break moment in trade talks, with many investors doubting a deal will be reached.
Sterling slipped on Thursday but still held near a three-month high, as U.S. dollar weakness offset some of the uncertainty about the outcome of Brexit talks.
The dollar edged lower against a basket of currencies on Wednesday, trading near a three-month low, even as a risk-on rally in global financial markets appeared to stall after U.S. data showed a less-than-rosy economic picture.
Sterling edged lower on Wednesday, showing little reaction to finance minister Rishi Sunak's plans to borrow amounts not seen in Britain's peacetime history.
The U.S. dollar fell on Tuesday as risk appetite improved after U.S. President Donald Trump accepted the transition to a Joe Biden presidency and on optimism that COVID-19 vaccines are close to being rolled out.
Demand for riskier assets on Tuesday kept sterling close to the two-month high it reached the day before, with investors also hoping this week's Brexit talks will result in a deal.
The dollar bounced off an almost three-month low against a basket of currencies on Monday as data showed that U.S. business activity expanded at the fastest rate in more than five years in November, and after the index hit strong technical support.
Sterling rallied on Monday, briefly touching a 2-1/2-month high, as more positive news about a potential COVID-19 vaccine propelled investors to buy riskier currencies and investors bet Britain and the European Union would clinch a Brexit trade deal.
The dollar on Friday rose against major currencies such as the euro and yen, with traders consolidating positions amid competing forces that pull the currency in different directions: the surge in virus cases, on the one hand, and positive vaccine news, on the other.
Sterling was on course for its third consecutive week of gains against the dollar on Friday, driven by renewed hopes that Britain and the European Union will reach a trade deal.
The dollar slid for a sixth straight session on Thursday, after trading higher for most of the day, on reports that U.S. Senate Republican leaders have agreed to resume negotiations on another coronavirus stimulus package.
The dollar slipped for a fifth straight session on Wednesday, sliding to a more than one-week low, as positive vaccine news offset the surge in coronavirus cases and tighter economic restrictions across the United States and Europe.
Sterling traded at a one-week high on Wednesday, helped by a weaker U.S. dollar and by hopes that Britain will forge a post-Brexit trade deal with the European Union in time for its departure from the customs union and single market in January.
The safe-haven Japanese yen sat near a one-week high and a steady U.S. dollar held commodity currencies in check on Wednesday, as worries about rising coronavirus cases tempered optimism around promising vaccine trials.
The dollar fell to a one-week low on Tuesday in quiet trading, still weighed down by optimism over a second coronavirus vaccine, as the outlook for the currency remained downbeat with the Federal Reserve and U.S. Congress poised to do more to ease COVID-19's economic damage.
Sterling rose against a broadly weaker dollar and edged higher against the euro on Tuesday as traders awaited news on the progress of trade talks between Britain and the European Union.
The dollar nursed losses on Tuesday as a return of coronavirus restrictions in some U.S. states and worries about a smooth transition for President-elect Joe Biden offset optimism about a coronavirus vaccine.
The dollar was little changed on Monday after pharmaceutical firm Moderna <MRNA.O> became the second U.S. company in a week to report positive results from its COVID-19 vaccine trials.
Sterling slipped back below $1.320 on Monday, even as global risk appetite started the week on a high, as pound-traders focused on Brexit negotiations that resumed in Brussels.
The safe-haven Japanese yen and Swiss franc strengthened on Friday, as the threat of a new COVID-19 wave in the United States and Europe chilled the increased risk appetite that had been driven by promising vaccine news earlier this week.
Sterling ticked up on Friday against the dollar and euro after news that British Prime Minister Boris Johnson's top adviser and Brexit mastermind Dominic Cummings was set to leave, as talks over a trade deal with the European Union go down to the wire.