The pound sailed to its highest in more than six months after May said the election would "secure the strong and stable leadership" position needed for talks with the European Union about terms for the looming exit.
Sterling initially plummeted nearly a cent against the Australian Dollar ahead of the PM's statement as some investors speculated the May might be stepping down, but the pairing quickly recovered its losses as she announced that she wishes to hold a general election on the 8 of June.
LONDON, April 19 (Reuters) - The euro steadied on Wednesday near a three-week high against a dollar kept weak by lower USA rates and doubts over President Donald Trump's promised fiscal boost.
"That may reduce the risk of a negotiation failure and thus "chaotic Brexit", but also of the United Kingdom remaining in the Single Market in the long-term or even reversing the decision to leave the European Union".
Tuesday's 2.2% jump saw the pound shatter a months-old trading range.
After the British pound took centre-stage on Tuesday with its second-largest one-day rise since 2008, the Australian dollar was the biggest mover on major currency markets on Wednesday, sliding 0.7% as iron ore prices took a dive.
Oil prices were weighed by concerns that US production growth is undermining efforts to cut oversupply after a USA government report said shale oil output in May was expected to post the biggest monthly increase in more than two years. The euro fell to $1.0714 from $1.0731.
Against its perceived safe-haven Japanese counterpart, the dollar was slightly higher on the day at 108.84 yen JPY= , pulling away from five-month lows touched on Monday. Yields on 10-year Treasury paper sank to 2.17 percent, a world away from the 2.629 peak seen in March.
The U.S. rate repricing has come on the back of weaker-than-expected economic data and doubts that Trump will deliver on the tax cuts and relaxed regulation he promised, a package that traders had hoped would stimulate growth and inflation.
That, in turn, has taken the steam out of Wall Street. The Dow fell 0.55 per cent on Tuesday, while the S&P 500 lost 0.29 per cent and the Nasdaq 0.12 per cent.
The pan-European FTSEurofirst 300 index lost 1.21 percent and MSCI's gauge of stocks across the globe shed 0.61 percent.
Oil prices slipped as USA crude stockpiles fell by less than expected and a US government report said shale oil output in May was likely to post the biggest monthly increase in more than two years.
The dollar index, which measures the greenback against a basket of six other major currencies, hit a three-week low on Tuesday as 10-year treasury yields fell below 2.2% to their weakest levels since the U.S. election results, and remained close to that level on Wednesday.