Today has been a choppy one for the GBP/USD cross, with exchange rates bouncing between $1.2758 and $1.2707.
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Initially the pound started well after the dollar weakened during the Asian trading session, with the currency pair rising around half a cent. The dollar lost ground after expectations of additional rate rises from the Federal Reserve this year have begun to fade.
The pound was unable to hold onto the gains and within a few hours had lost the ground it made this morning. However, Sterling was able to bounce back again after news broke that UK Prime Minister Theresa May had secured a deal with the DUP.
GBP/USD graph
After losing her majority in the UK election earlier this month, todays deal has allowed May to boost her minority government and continue with her Brexit plans.
The deal is also good news for investors as it removes some of the political uncertainty ahead of the Brexit negotiations.
Markets will now be able to focus more clearly on the official divorce talks with the European Union, and if negotiations run smoothly we could see the pound start to rise against the dollar over the coming weeks.
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