Pound above $1.40

Sterling rose against the dollar today, cementing gains on the back of a broadly weakened dollar, with traders eyeing earnings data next week to give the pound fresh momentum.

After a strong start to the year on the back of growing expectations that the Bank of England will raise rates faster than previously thought, and optimism Britain can secure itself more favourable terms from the European Union when it leaves next year, sterling has stumbled in recent weeks.

Renewed concern about whether it can agree on a transition deal with the EU has overshadowed more hawkish comments from the BoE about the need for rate rises sooner and to a little bit more of an extent that it flagged last year.

A BoE survey published on Wednesday that showed British workers in line for their biggest pay rises since 2008 could also fuel policymaker concerns over inflationary pressures.

We would need “to see very strong earnings data” next week to push sterling, in the absence of further dollar weakness, much higher and back towards the $1.4300 it hit in January, its highest level since the vote to leave the European Union in June 2016.

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