Pound jumps to highest since Brexit vote on hopes of better deal

Pound jumps to highest since Brexit vote on hopes of better deal”

The currency had been trading at about $1.50 before the result of the referendum became clear.

Analysts said the rise in pound had been driven by the weakness in the dollar.

"Sterling jumped 1 per cent today to reach its best level since the Brexit vote after a bout of dollar weakness and some good news on Brexit delivered another boost to pound bulls", said Neil Wilson, a senior market analyst at ETX Capital.

The move sent the GBPUSD higher.

Month-on-month, consumer prices minus the impact of volatile food and fuel prices rose 0.3%, beating forecasts of a smaller uptick from 0.1% to 0.2%.

This puts year-on-year core inflation at 1.8%, against bets of a hold at 1.7%, meaning price growth is just 20 basis points below the Federal Reserve's target level. Interesting times for anyone now holding Sterling.

On the other hand, any disappointment is likely to encourage further doubts over the likelihood of the Fed raising interest rates again in the near future, to the detriment of Dollars exchange rates. Imports accelerated unexpectedly in Yuan terms, and when not priced in the local currency, it seems companies slammed the brakes on their imports during December.

Monday's release of the TD Securities inflation estimate for December could help create some appetite for the Australian Dollar.

A fresh uptick in inflation could provoke some marked volatility for the GBP/USD exchange rate, though.

But sterling made up more ground versus the dollar, weakened by the United States producer price data that suggested inflation may not pick up as expected later this year.

Although an easing in price pressures would bode well for squeezed consumers this could also discourage the Bank of England (BoE) from raising interest rates again.

Sluggish productivity growth has always been a scourge for the United Kingdom economy, but if Tenreyro were to offer cause for optimism this could lift Pound Sterling when trading begins again on Tuesday.

"We're in a pretty good situation: the economy is doing great, everyone expects us to raise rates gradually... and if the data changes we can respond to that".

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