Currencies: Euro, sterling reverse Monday’s slump, dollar slips

European rivals of the U.S. dollar rebounded Tuesday from their sharp selloff at the start of the week, as Brexit hopes supported Britain’s pound though the infighting in London continued.

In the U.K., it is crunchtime as well and investors are watching whether Tuesday’s meeting of Prime Minister Theresa May’s cabinet will yield anything new. Monday’s trading action had been marked by conflicting comments from London and Brussels that led market participants to fear a deal was further off than hoped.

A flurry of Brexit headlines kept investors on their toes on Tuesday after Irish broadcaster RTE reported a deal on the Irish border had been struck, shortly after Bloomberg reported that the cabinet expected a Brexit backstop text—relating to the Irish border issue—to be completed, leading Sterling GBPUSD, +0.4395% to extend its gains and rally to a high of $1.3046, compared with up from $1.2851 late Monday.

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