Sterling Climbs Above $1.40 Amidst Increased Investor Confidence
The British pound rose above $1.40 this week for the first time since the immediate aftermath of Brexit.
This resurgence sees the pound take its place as one of the strongest performing currencies of 2018 so far, with a near 5% rise against the dollar since the beginning of January. Sterlings 7.3% rise against the dollar makes it the best performing G10 currency over the past six months. While the pound was expected to do well at the start of 2018, the speed of gains has come as a shock.
The size of this increase is partially the consequence of a declining dollar. President Trump’s policies on tax reform, combined with fears surrounding the recent US government shutdown have negatively impacted the dollar’s value.
Sterling’s resurgence is not solely confined to its performance against the dollar however, as the pound has also increased 1.3% over the euro in the past three days. Recent news surrounding Brexit talks has led to optimism among investors, with a ‘softer Brexit’ increasingly likely. French President Emmanuel Macron outlined the possibility of Britain having its “own solution” regarding Brexit, which has helped to quell investor concerns over a potential no-deal scenario.
The pound is back close to its value in the months leading up to Brexit, and outlook is positive for the remainder of 2018. ING FX specialist Viraj Patel believes that if the weakness of the dollar continues, sterling could reach $1.53 by the end of this year.