The pound has swooped above $1.40 as the US shutdown ends, its highest level since the EU referendum

Lucy White
Sterling Rates To Fluctuate During Brexit Negotiations
Source: Getty

Sterling has hit a post-referendum high against the US dollar, rising above $1.40 in afternoon trading as the end of the US government shutdown did little to lift the greenback.

The pound briefly surged over the $1.40 line in morning trading, before making further gains as the afternoon went on.

Read more: The dollar trades lower as US government shutdown deadline looms

"Buoyed by the weakness in the dollar as the US government shutdown came to an end, the pound was able to touch the $1.40 psychological barrier for the first time since 2016. Sterling was also able to strengthen against the euro, rising to a month high," said William Anderson Jones at RationalFX, a foreign exchange provider.

"The pound’s recent rally reflects optimism towards the chances of a softer Brexit. Despite recent economic data often proving weaker than hoped, the trend of a weak dollar coupled with apparent progress in discussions between the UK and EU ahead of the long awaited trade talks has helped to firm the UK’s currency, and avoid the volatility seen by investors when Brexit progress was at its most uncertain."

Read more: Sterling approaches $1.40 for the first time since the post-Brexit-vote crash

The FTSE 100 index stayed relatively calm, up 0.12 per cent at the time of writing. Meanwhile the S&P 500 made slight gains in the US, rising by 0.2 per cent. The Dow Jones was just fractionally in the green, up 0.7 per cent.

"Interestingly the Dow couldn’t make much out of the greenback’s green gills, though even a meagre 0.1 per cent rise was still enough for the ever-ascendant index to hit a fresh all-time high," said Spreadex's Connor Campbell.

Sterling is likely to stay in the spotlight throughout this week, as economic data including the UK's gross domestic product estimate for the fourth quarter of 2017 is set to be released on Friday.

Read more: The pound has gone berserk against the dollar: Here's why

Related articles