The pound has continued its recent strong run against the dollar, pushing firmly above $1.43 for the seventh consecutive session, resulting in the UK having the best performing currency this year among the G10 group of rich nations.
According to many traders, the prospect of higher UK interest rates has made the pound more attractive while the dollar has been hit by fears of trade disputes.
The pound started the week in a strong position, gaining almost a cent and rising to $1.4323, while against the euro it was 0.2% higher at €1.1569.
However, following the vote to leave the EU in June 2016, the pound fell dramatically hitting $1.2063. But, the pound has recovered since then.
Rabobank currency strategist Jane Foley stated that the strong run can be dated back to September 2017, when it became clear that the BoE was ready to increase interest rates, shortly after increasing the base rate by 0.25% to 0.5%.
The pound’s momentum was maintained in February when the bank hinted at an accelerated pace of interest rate rises, with another increase expected in May.
Foley also commented that any indication about what happens to interest rates after that is the key to the pound’s next move.
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