Sterling is heading for the $1.40 mark again: Here's why

 
Emma Haslett
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The pound fell today (Source: Getty)

The pound fell sharply in morning trading as the dollar recovered some of the strength it lost at the end of last week.

Having hit post-Brexit vote highs during trading last week, the pound was down 0.7 per cent against the dollar in mid-morning trading today, at $1.4065.

Sterling wasn't the only currency falling against the dollar: the euro was down 0.2 per cent, at $1.2401, while the yen was down 0.1 per cent at $0.0092.

Last week the pound rose as high as $1.43 on dollar weakness, after traders took comments by Steve Mnuchin to heart.

During a session at the World Economic Forum in Davos, the US Treasury secretary said a weak dollar was "good" for the US.

"The dollar remains the story here and the dollar index is currently hunkering down on the 89 handle having firmed a little in Asia overnight," said Neil Wilson, senior market analyst at ETX Capital.

"The conundrum of rising US yields and a falling dollar remains in place but with dollar shorts getting crowded traders should be wary of a squeeze."

Read more: Sterling has risen to yet another post-Brexit vote high

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