Sterling regains some shine

The pound has perked up. Last week it jumped to $1.43, the highest level since the referendum on leaving the EU.

Andrew Van Sickle
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published
in Features

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The pound has perked up. Last week it jumped to $1.43, the highest level since the referendum on leaving the EU (before which it hit $1.49). On a trade-weighted basis it has strengthened to a level last seen in late June 2016.

The recovery is partly a question of dollar weakness, but investors have also "become more bullish on the pound independently", says Jemima Kelly on Reuters. Speculators' bets on further sterling gains are at a three-and-a-half-year high. Unexpectedly strong recent data has brought forward the prospect of further interest-rate rises. Employment has climbed to a new record, while GDP grew by 0.5% in the final quarter of 2017.

There is also a growing sense that Brexit may not be that bad after all. There is good news for equity investors too, says Lex in the Financial Times. The FTSE 100's post-referendum jump was based on a weaker pound boosting the value of overseas earnings; the blue chips make over 70% of their sales abroad. But the strong equity-market rally shouldn't melt away just because sterling has recovered.

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Higher global growth and rising commodity prices are offsetting the trend, while sterling hasn't bounced against every currency: it is still 12% down against the euro since the vote.

Andrew Van Sickle
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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