Pound hits highest level since Brexit vote

Brunilde Fioravanti
Gennaio 13, 2018

This is despite a complete lack of fresh United Kingdom ecostats today, although a suggestion from Nigel Farage that a second Brexit referendum might be necessary has interested traders.

Analysts said the rise in pound had been driven by the weakness in the dollar.

It's good news for Brits travelling to the States this year as the pound has just hit the highest levels against the dollar since the Brexit vote.

As a result, the pound hit the highest level against the US dollar (GBP/USD) since the Brexit referendum, nearing the 1.37 barrier, while the pound also climbed against other currencies, making notable gains against the Canadian dollar, Australian dollar, New Zealand dollar, and South African rand. If the monthly gain comes in as expected, then annual core inflation will hold at its current level'.

On the other hand, any disappointment is likely to encourage further doubts over the likelihood of the Fed raising interest rates again in the near future, to the detriment of Dollars exchange rates.

Unless policymakers continue to express a more hawkish outlook on the whole then the US Dollar is likely to remain under some degree of downside pressure.

The rate of imports collapsed from 17.7% to 4.5% year-on-year, drastically undershooting forecasts for a slowdown to 14.8%.

Monday's release of the TD Securities inflation estimate for December could help create some appetite for the Australian Dollar.

GBP/AUD Exchange Rate Forecast: Will Australian Inflation Estimate Help Australian Dollar to Recover Next Week?

Looking ahead, there is no United Kingdom data set for release on Monday, although markets may be interested in an after-session speech by Bank of England (BoE) economist Silvana Tenreyro, who will be speaking at a productivity event in London.

Sluggish productivity growth has always been a scourge for the United Kingdom economy, but if Tenreyro were to offer cause for optimism this could lift Pound Sterling when trading begins again on Tuesday.

While inflationary pressure is forecast to have fallen back slightly from 3.1% to 3.0% on the year in December this may not be enough to boost GBP exchange rates, however.

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