British pound retains strength versus US dollar

British pound retains strength versus US dollar

The British pound gained further ground against the US dollar Monday, as sentiment remains supportive of sterling and uncertainty continues to weigh on dollar bids.

Things could change later Monday, when the US markets open after a four day break. However, the British pound is still pushing higher, with less than one hour to go.

At 1400 BST, one British pound was worth $1.3380. That’s up from $1.3334 at the UK market open and also higher than the $1.3324 at the close of US business, Wednesday November 22.

Uncertainty weighs

Analysts said its likely uncertainty continues to weigh on US dollar investor decisions. In particular, while the latest Fed meeting minutes firmed up the view rates would rise in December, they also confirmed disagreement on the inflation question.

In addition, although there are widespread hopes more clarity and possibly an important vote on tax reforms will go ahead this week, there are still fears it won’t go to plan.

New US home sales data are due Monday which could give investors some impetus. A raft of Fed committee member speeches are also due in the coming days and could have a direct impact on investor sentiment.

British pound momentum

Currency investors will have a lot to mull over this week. Bank of England (BOE) member speeches are due, with the first of the week expected shortly from Andy Haldane.

It's possible important Brexit negotiation details could also surface. And, if they fall short of current expectations, have the potential to reverse the current sterling upside.

With the UK’s data calendar particularly light this week, any reliable steers ahead of the December Brexit summit could have a real effect on cable.

“The next couple of weeks will see a lot of noise in the build up to this (Brexit focussed EU summit) – noise that we think could be ultimately positive for the pound, especially if it continues to ascribe a 'good chance' to there being progress made in Brexit talks,” said ING analysts in a research note.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.

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