Sterling shot to a fresh post-Brexit-vote high of $1.41 today, extending a recent rally that has seen confidence in the British currency recover.
The pound climbed as much as 0.6 percent, its highest level since Britain’s vote to leave the European Union in June 2016. Against the euro, the pound was up 0.3 percent at a five-week high of 87.615 pence.
Analysts said there was no specific news that triggered today’s move, but a continuation of the recent trend higher on the back of growing confidence Britain can secure favourable terms for departing the EU, as well as broad dollar weakness.
The number of people in work in Britain surged unexpectedly in the three months to November and regular wages rose at their fastest rate in almost a year, official data showed this morning.
The Office for National Statistics (ONS) said the number of people in work rose by 102,000 in the three months to November, the biggest increase since the period to July and taking total employment to a record 32.2 million. A poll of economists had pointed to a fall of 13,000.
The ONS said workers’ earnings, excluding bonuses, rose by an annual 2.4 percent in the three months to November, the biggest increase since December 2016 and compared with 2.3 percent in the three months to October.
Sterling, the second-best performing of the G10 currencies so far in 2018, has also held its own against the euro at a time when the single currency is enjoying strong demand – a sign sterling-specific factors were helping drive the pound.
With the risks of a disorderly exit from the EU receding, investors are looking for signs the Bank of England could hike interest rates more than the single raise this year that the market has currently priced.
Against the currencies of its biggest trading partners, sterling is at its highest level since mid-2017 but remains far below levels seen before the Brexit vote.