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Pound Hits Post-Brexit Vote High as Investors Look to Labor Data

April 17, 2018 8:29 am

The pound is the best-performing major currency this year, and some investors are positioning for further gains.

Sterling touched its highest level against the dollar since the U.K. voted to leave the European Union, with currency bulls supported by seasonal flows traditionally seen in April, the dollar’s weakness and money-market traders betting on a Bank of England interest-rate increase next month. It could get another boost if labor-market data due Tuesday show a quickening of wage increases.

“A close above this level will set off more alarm bells to buy,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. “Earnings data will be key too. Any sign of further real-wage growth is a textbook positive for a currency.”

With under a month until the BOE makes its next policy announcement on May 10, the market is pricing an 86 percent probability that the central bank will lift borrowing costs. Data on Tuesday will show U.K. average weekly wage growth accelerated to 3 percent in the three months through February, according to a Bloomberg survey of economists. Such a reading would reinforce the case for a May rate hike, according to ING Bank NV strategist Viraj Patel.

The pound gained 0.2 percent to $1.4365 as of 9:11 a.m. in London after touching $1.4377 earlier, the highest since June 24, 2016. It was little changed at 86.31 pence per euro.


Categorised in: Breaking News