Sterling stops the Brexit slide by hitting three-week high

Jake Cordell
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Will it be clear skies ahead for the pound?
Will it be clear skies ahead for the pound? (Source: Getty)

The pound has climbed higher again today as the trickle of strong post-referendum data boosts the outlook for the beleaguered currency.

Sterling briefly touched above $1.32 this morning, a three-week high, before falling back to stand at $1.3187, up 0.4 per cent on the day and nearly four cents clear of last week's low.

The pound also picked up against the euro, climbing 0.2 per cent even after strong data from the single currency bloc in the shape of the latest purchasing managers' indexes (PMI) showed little sign of a Brexit hit.

Strong figures from housebuilders Persimmon this morning added to the general easing of the post-referendum recession fears, while the latest CBI industrial trends survey showed export orders at UK manufacturers had reached their highest level for two years off the back of the weaker pound.

Jameel Ahmad, vice president of market research at FXTM, said: "The pound is continuing its recovery phase as the new trading week continues, extending gains from last week following economic data indicating that the EU referendum outcome might not have negatively impacted the UK economy in the way that was previously feared."

Despite the climb, which takes the currency to its highest level since the Bank of England unleashed its rate-cutting, money-printing stimulus package at the beginning of August, traders expect the currency will still be under pressure.

Data out earlier this week showed short positions - effectively bets that sterling will fall - in the the pound were at their highest ever level since the referendum.

Hinting that sterling would struggle to break much higher, Adhmad added: "The previous investor mind-set for months has been to sell the rally and I don’t personally think this has changed."

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