Sterling jumped as much as 1.6 percent against the dollar on Tuesday to hit its highest levels since mid-December, after British Prime Minister Theresa May surprised markets by calling for an early parliamentary election in June.

Standing outside her Downing Street office, May said she had decided "with reluctance" that an election was needed to secure political unity and stability as Britain negotiates its way out of the European Union.

Sterling jumped as high as $1.2772, its strongest since Dec. 14 and just shy of its highest in six months, as investors viewed the election as lessening political uncertainty and making it more likely that Britain could maintain some kind of preferential access to the single European market.

Its gains against the dollar put sterling on track for its biggest one-day rise since January, and prompted finance minister Philip Hammond to say in parliament in a rare comment on the currency that its rise showed markets were confident the Conservative government would win an increased majority.

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