- Sterling climbs more than 1.5% against the dollar on Wednesday afternoon, gaining more than two cents on the greenback.
- Foreign exchange traders take advantage of the slumping dollar after US Treasury Secretary Steven Mnuchin said a weaker currency was beneficial to US trade.
- Sterling has also been helped by good UK jobs data from the Office for National Statistics earlier in the day.
LONDON – The pound surged on Wednesday afternoon, gaining more than 1.5% against the dollar to reach another fresh post-Brexit vote high.
By 3.15 p.m. GMT (10.15 a.m. ET) sterling is as high as 1.4217 on the dollar, a gain of more than two cents, as the chart below illustrates:
Much of sterling’s strength on the day is related to the continuing weakness of the dollar, which has fallen against most of its major counterparts after US Treasury Secretary Steven Mnuchin said a weaker currency was beneficial to US trade.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters at the World Economic Forum in Davos. He added that the short-term value of the dollar was “not a concern of ours at all.”
The pound was also helped in morning trade by news that the number of people employed in the UK has hit a fresh record, while wage growth continues to pick up.
The ONS said on Wednesday that there were “32.21 million people in work in the three months to November 2017.”
Overall, the employment rate was 75.3%, a joint high since records began in 1971.
While most analysts expected sterling to post gains during 2018, the speed at which it has appreciated early in the year has confounded expectations. The currency is up by almost five cents against the dollar since the beginning of the year and is the best performing of the G10 basket of major currencies over the past six months.
That appreciation is largely down to the weak dollar, but also reflects growing confidence that the UK and EU will be able to strike a Brexit deal beneficial to both parties.
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