U.S. trade hopes lift sterling to six-week high

LONDON (Reuters) – Sterling climbed to six-week high against the dollar on Wednesday and scored a 3rd straight gain around the euro on hopes that Theresa May’s first getting together with Donald Trump would pave the way for a rapid U.S. trade deal.

For dealers it was a welcome break from higher than a week of intense Brexit developments having given a degree of clarity about how exactly the initial steps of your complex process will run.

After strong morning, a mid-day burst of buying took the pound up past $1.26 for your first since Dec. 14 and it also reached $1.2625 prior to running out of steam.

It gained 0.6 % against the two euro additionally, the yen, to 85.11 pence per euro and 143.33 yen and respective near three- and two-week highs.

“Industry is taking off shorts (on sterling) at the view that Brexit uncertainty won’t rise to any extent further at the moment,” Crdit Agricole FX Strategist Manuel Oliveri said.

“Its allowing focus to become bit more on external developments also, the headlines of May heading to the selecting Trump at the weekend are proving supportive.”

Before then, Britain receives Q4 GDP data on Thursday, expected to display little evidence yet of Brexit-related trouble. We are is also thanks to publish legislation seeking parliament’s approval to start out the formal process.

“I arranged that bold afford a global Britain a week ago and I recognise there’s an appetite in that house to discover that plan plan in a white paper,” May told parliament, confirming that they would now publish the report having previously refused.

Germany’s finance minister reiterated the EU’s warnings to Britain not to try to turn itself straight into a tax haven to woo companies after it leaves the EU, saying this kind of attempt would go “awry”.

One of Deutsche Bank’s London analysts meanwhile said sterling’s role like a global reserve currency was declining, predicting it will be less traditional as Britain leaves the EU and also China has drastically cut its holdings.

“Within the extent that reserves serve as backstops against currency stress, rather then as sovereign wealth, the pound’s diminishing role in international capital flows post-Brexit should permanently reduce its reserve status,” the report said.