Tuesday 16 January 2018

Pound higher despite May's latest Brexit crisis

United Kingdom's ambassador to the European Union Ivan Rogers
United Kingdom's ambassador to the European Union Ivan Rogers

Catherine Evans

Sterling inched higher against a broadly weaker dollar yesterday, with solid indications of business and consumer sentiment helping pull it back from two-month lows hit on a volatile first day of 2017 trading.

Sterling gained 0.3pc on the day to trade at $1.2276 (€1.17) after the numbers and was steady at 85.02p per euro, down from a two-week high of 84.51p on Tuesday.

The early departure of Britain's ambassador to the European Union, Ivan Rogers (inset), and the tone of his resignation letter, have added to concerns of a rocky few months in prospect for sterling as Britain prepares formally to launch talks on leaving theUnion.

But data on the economy itself remains far stronger than many economists feared after the vote for a Brexit last June, and construction industry and consumer credit data yesterday both beat forecasts.

Politics, including Mr Rogers' resignation, are widely expected to weigh on the pound at least until the promised formal start of exit talks with the EU's 27 other members in March.

"I don't think any of that story can be positive for the currency," HSBC strategist Dominic Bunning said.

"It highlights the uncertainty that has weighed on sterling for some time." (Reuters)

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