LONDON (Reuters) - Sterling surged by as much as 1.3 percent against the dollar on Tuesday to hit its highest levels since mid-December, after British Prime Minister Theresa May surprised markets by calling an early parliamentary election for June.
Sterling jumped to as high as $1.2730, its strongest since Dec. 14. It was on track for its biggest one-day rise since January.
Deutsche Bank, one the world's biggest sterling bears, said May's call for a general election was a "game-changer" for the currency, and that it would raise its forecasts for the pound in the coming days.
Analysts at the bank and elsewhere said May's move should result in a larger and more stable majority in parliament, thereby reducing the likelihood of a so-called "hard Brexit".
On a trade-weighted basis, sterling jumped 1 percent to a four-month high of 78.8.
(Reporting by Jemima Kelly, editing by Nigel Stephenson)
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