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New York - The pound and the euro extended gains on Wednesday but remained far below their levels before Britain voted last week to quit the European Union (EU).
Financial markets that had reeled after last Thursday's EU exit vote rebounded for a second straight day as fears about Brexit's impact on the global economy receded.
"The pause in the selling in nearly all risk assets following the UK's historic move to leave the European Union appears to be more of a period of market consolidation rather than any meaningful improvement in underlying conditions," Omer Esiner of Commonwealth Foreign Exchange said.
The dollar, which had surged earlier in the week as investors sought a haven, broadly eased back.
The euro rose to $1.1124 around 21:00 GMT from $1.1065 at the same time on Tuesday. The pound rose 0.9% against the dollar to $1.3455. It gained 0.3% against the euro at 82.67 pence.
Stephen Innes, senior trader at OANDA Asia Pacific, warned: "This relative calm is unnerving, given how fragile investor sentiment is, and the likelihood of renewed (pound) volatility.
"As a result, FX markets should remain a hot spot for the foreseeable future. Liquidity is gradually improving and appears to have weathered the initial Brexit sell-off."
