UKX FTSE 100 Index

By William Watts, MarketWatch , Aaron Hankin

After a volatile trading session, sterling is set to close above $1.30

The British pound traded higher Wednesday after Prime Minister Theresa May said her cabinet had approved a draft EU withdrawal agreement.

The pound traded at $1.3054 versus the dollar, up 0.6% from its level late Tuesday. It had been a volatile session for the sterling, which traded to an intraday low of $1.2879 before surging back through $1.30.

"The British Pound has endured a volatile trading session in what may be a sign of things to come," wrote Christopher Vecchio, currency strategist at DailyFX. "A day marked by rumors over deal-or-no-deal, cabinet resignations, and a no-confidence vote has yielded to an announcement by UK Prime Minister Theresa May that her cabinet has agreed to a Brexit deal with the European Union."

From here, the draft will head to a Brussels summit where it will require the approval of EU leaders before heading back for a final vote in the House of Commons, likely before Christmas. The U.K. is set to leave the EU on March 29, 2019.

Read:Brexit deal faces hurdle as U.K.'s May must sell it to divided government (http://www.marketwatch.com/story/brexit-deal-faces-hurdle-as-uks-may-must-sell-to-divided-government-2018-11-14)

Meanwhile, the ICE U.S. Dollar Index , a measure of the U.S. currency against a basket of six major rivals, was at 96.80, down 0.2%. The index slipped from a session high of 97.41 after the government said consumer prices rose 0.3% in October, matching those polled by MarketWatch. The increase was the biggest since January.

Read:Consumer inflation posts biggest jump in nine months on higher cost of gas, rent, used cars, CPI shows (http://www.marketwatch.com/story/consumer-inflation-posts-biggest-jump-in-nine-months-on-higher-cost-of-gas-rent-used-cars-cpi-shows-2018-11-14)

The greenback fell versus the Japanese yen , as investors flocked to haven assets amid the afternoon selloff in equities. One dollar was fetching 113.49 yen compared to 113.86 on Tuesday.

Oil futures finished higher after a sharp Tuesday selloff that accelerated a crude-oil rout that saw the commodity fall into bear-market territory last week, just a little over a month after trading at a nearly four-year high.

See:5 reasons oil prices are in a history-setting tailspin (http://www.marketwatch.com/story/5-reasons-oil-prices-are-in-history-setting-tailspin-2018-11-13)

The U.S. dollar was unchanged versus its oil-sensitive Canadian counterpart at C$1.3235. The U.S. dollar is up 0.5% against the Canadian currency in November.

"So far the impact on the Canadian dollar has been limited but it will be very difficult for the USD/CAD to fall if oil prices continue to slide," said Kathy Lien, managing director of FX strategy at BK Asset Management, in a note.

Lien said the U.S. dollar is likely to remain strong overall through the end of the year, thanks to a combination of solid data, rising interest rates, weakness in equity markets and trade spats between Washington and other major trade partners.

"The only risk is U.S. data. This week we have consumer prices and retail sales scheduled for release. Both of these reports have a direct influence on Fed policy and will determine the market's confidence in Fed's outlook," Lien said.

See:MarketWatch Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

(END) Dow Jones Newswires

November 14, 2018 16:15 ET (21:15 GMT)

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