Foreign Exchange Daily Market Update 25/01/2018

Thu, January 25, 2018

Sterling hits highest level since April as Jobs data adds to enthusiasm.

Sterling increased hit the highest level since April as hopes for a soft Brexit and better-than-expected employment figures strengthen the pound against a weaker dollar.

Sterling hit $1.426 against the dollar, as indications are that Britain may stay close to EU rules after leaving the bloc which helped the sterling extend its gains made on the back of strong U.K. employment figures.

Sterling has also benefited from a weaker dollar, with the GBP rising nearly 3% this week.  

Data showed UK employment rose and wage growth increased slightly in November, sterling gained momentum when David Davis the U.K. Brexit Secretary told lawmakers that Britain will initially stay closely aligned to the EU’s regulatory jurisdictions after it leaves. He also mentioned that an agreement could be fixed on a transition period following Brexit by March.

Many analysts expect further sterling strength. 

The strong jobs report could result in a repricing of market expectations for the next BOE interest-rate hike, which could further boost the pound. We could see baby steps in Feb quality inflationary report and then a move in May’s meeting.

Sterling increased by as much as 1.7%, the highest since April 18, to $1.4262 against the dollar. It rose 0.9% to 1.409 against the Euro.

Data to look out today.   

12.45 EUR rate decision.

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