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The dollar remains the key driver of the pound to dollar exchange rate (GBP/USD).

Like other sterling pairs, GBP/USD fell in Asian FX trade as markets digested news of a tax U-turn by the UK government, but soon recovered as interest rate markets gave a relatively sanguine response to the political fuss.

GBP/USD fell to 1.3107 in Asian but has since pared the loss to 1.3157 in London morning trade.

Instrumental to the recovery was the opening of UK bond markets, which initially fell and then recovered, suggesting there was no market-busting aspect to the government's plans to fiddle with tax rates.

The exchange rate now holds onto the nine-day exponential moving average (EMA) at 1.3160, and staying above here will help confirm the short-run rebound is still unde

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