By Chelsey Dulaney and Ira Iosebashvili

The dollar fell for a fifth-consecutive session Thursday, while the British pound soared as investors digested new developments in the U.K.'s process to leave the European Union.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, was recently down 0.3% to 87.60. The British pound was the best-performing major currency, rising 1.3% to $1.263.

The dollar has sold off this week as investors focus on the increasingly uncertain outcome for the U.S. presidential race. Polls this week have shown the race tightening after the Federal Bureau of Investigation announced Friday that it reopenedits investigation into Democratic nominee Hillary Clinton's emails.

"Investors had grown comfortable with the idea Clinton was going to win, and last week's announcement by the FBI has made them doubt this," wrote analysts at Brown Brothers Harriman in a research note. Thus, "investors have reduced risk."

Investors have also sold the Mexican peso, as many worry pledges from Republican nominee Donald Trump to reform trade and immigration policies will damage Mexico's economy.

Election fears have largely overshadowed the Federal Reserve's policy meeting on Wednesday, where the central bank held rates unchanged but signaled it could raise borrowing costs in December.

CME Group data shows markets are pricing in a 71.5% chance that the Fed raises rates next month, but analysts warn that election-related market turmoil or a softening in data could hinder the Fed's plans. Higher rates typically boost the dollar by making the currency more attractive to yield-seeking investors.

Data Thursday showed U.S. worker productivity advanced at the best rate in two years during the third quarter, a sign an extended downward trend in the measure has stabilized. Meanwhile, the number of Americans seeking first-time jobless benefits climbed to the highest level since early August.

The reports come ahead of Friday's closely watched U.S. jobs report, viewed by many investors as the best read on the health of the U.S. labor market.

Meanwhile, the pound climbed to its highest level since Oct. 7, when the currency tumbled more than 6% in early Asian trading hours. A court ruled Thursday that the U.K. government needs parliamentary approval to trigger the process of Britain's exit from the European Union.

The Bank of England also left interest rates unchanged at its latest meeting.

Mike Bird contributed to this article.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com and Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

November 03, 2016 16:55 ET (20:55 GMT)

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