The Pound Sterling began this year’s first trading day by hitting a 3-month peak versus the US Dollar. FX traders seem to have dismissed the latest data disappointment and are focusing instead on the looming Brexit discussions. In 2017, the Pound had its best yearly record in eight years with an overall gain of about 10% against the greenback. Data showed that manufacturing in the UK fell from a 4-year peak while the PMI manufacturing survey for December came in slightly below expectations at 56.3, down from November’s 58.2. For reference, any figure above 50.0 represents sector growth. Data for PMI Construction will be released tomorrow, and analysts are forecasting a decline in the reading to 52.7.
As reported at 11:43 am (GMT) in London, the GBP/USD was trading at $1.3551, a gain of 0.30%; the pair earlier hit a peak of $1.3567 before edging lower while the session low stands at $1.3498. The EUR/GBP pair was trading higher at 0.89165 Pence, a gain of 0.24%; the pair has ranged from a session trough of 0.88760 Pence to a peak of 0.89182 Pence.
Merkel Talks Could Benefit Sterling
One currency strategist believes that FX traders are waiting to see what kind of “tone” will be taken when the Brexit negotiations open. For Sterling, whether Angela Merkel can successfully form a coalition government so that she can win another term in office will also be critical to the Pound. In general, Germany is viewed as a British ally and many believe she would likely work towards achieving a trade deal that favors Britain.