Sterling surges against US dollar to yet another post-Brexit-vote high above $1.42 after new employment record

 
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Sterling Rates To Fluctuate During Brexit Negotiations
Dollar weakness and strong UK economic data helped propel the pound (Source: Getty)

Sterling today hit a new post-Brexit-vote high after government labour market figures showed employment hitting a record high amid more US dollar weakness.

The pound rose by more than two cents against the US dollar over the course of the day, a gain of more than 1.5 per cent. It hit an intraday high of $1.4232 at the time of writing, the highest since 24 June 2016.

The dollar has also come under pressure after US Treasury secretary Steve Mnuchin said a weaker greenback is better for the US economy.

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

Mnuchin told a news conference at the World Economic Forum, in the Swiss ski resort of Davos, that dollar weakness would boost US exporters by making their products relatively cheaper, an unorthodox position for the White House. Creating new US manufacturing jobs has been a key issue on US President Donald Trump's economic agenda.

Traders have sold dollars and bought pounds steadily since the new year, driving cable from around the $1.35 mark on 1 January to levels not seen since 24 June 2016, as the result of the EU referendum became clear.

Sterling has benefited in recent weeks from progress in the Brexit negotiations, and a lull ahead of talks on securing a transitional deal.

Read more: Sterling rises above $1.38 for the first time since the Brexit vote

Lukman Otunuga, a research analyst at FXTM, said: "A growing sense of optimism over a soft Brexit outcome has also played a role in the currency’s incredible appreciation."

Joel Kruger, a currency strategist at LMAX Exchange, forecasts the pound to rise to $1.45 by the end of the year, with a cocktail of "a pricing out of the worst case Brexit scenarios, a recovering UK economy, a pick-up in UK wage growth, [and] rising inflation".

However, the speed of the rise of sterling, and the fall in the dollar, during January is "perhaps a little too fast", he added, with a possible "corrective decline in the pound over the coming sessions."

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

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