The dollar sagged on Thursday, pressured by the pound which rose after fears of Britain leaving the European Union with no comprehensive agreement faded, although skittish emerging market currencies helped limit the greenback’s retreat.

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The dollar index against a basket of six major currencies stood at 95.034, down 0.15 percent after shedding nearly 0.3 percent overnight when it was nudged away from a two-week high of 95.737.

The catalyst behind the dollar’s fall was the pound, which surged nearly 1 percent at one point after Bloomberg reported that the United Kingdom and Germany were prepared to drop a key sticking point in Brexit negotiations.

Sterling added 0.1 percent to $1.2918 after rising 0.4 percent the previous day.

The British currency's rise also helped the euro, which gained about 0.45 percent on Wednesday. The single currency last traded little at $1.1645 for a gain of 0.15 percent.

The US currency dipped 0.15 percent to 111.37 yen.

The dollar may have pulled back from two-week highs but it was expected to stay well supported in the longer term, continuing to garner safe haven bids in the wake of weakness in emerging market currencies.

“The pound gained but its rise is likely to be temporary. The euro also rose thanks to the pound’s bounce, but the currency faces strong headwinds in the form of Italy’s fiscal issue and the economic crisis in Turkey,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“And with global trade concerns back at the fore, the dollar stands to benefit from an outflow of funds from emerging markets.”

The MSCI EM Currency Index slipped to its lowest since May 2017 on Wednesday.

Emerging market currencies have been hit by fears that the global trade conflict would negatively affect their export-oriented economies.

Argentina’s peso, which has lost more than 50 percent of its value this year, did mark a rare pause in losses overnight.

Helping install a bit of investor confidence, Argentine Economy Minister Nicolas Dujovne said on Tuesday he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month.

The Argentine peso closed up more than 1 percent at 38.52 per dollar on Wednesday.

Elsewhere, the Canadian dollar nudged up 0.1 percent to C$1.3168 per dollar.

The United States and Canada have made progress in talks to revise the North American Free Trade Agreement, and officials from the two sides will work into the night to flesh out areas for further discussion, Canadian Foreign Minister Chrystia Freeland said on Wednesday.

China's yuan was a shade weaker at 6.8468 per dollar in offshore trade after gaining 0.12 percent on Wednesday.

The Australian dollar was 0.05 percent higher at $0.7199, awaiting trade balance data at 0130 GMT for near-term cues.