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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
Reeves told scrapping pension salary sacrifice would cost average earner £377 a yearMPs – including chancellor Rachel Reeves – have received a letter warning of the dangers in reducing or removing salary sacrifice schemes for pension contributions, a plan under consideration by HMRC.
-
Equity release jumps 4% amid growing inheritance tax concerns and sticky inflationThe amount of money withdrawn by equity release has increased, but the total number of plans has fallen
