The pound surpassed the $1.43 mark on Monday afternoon reaching a post-Brexit referendum high as investors’ focus went towards a May interest rate increase.
Since Britain signed a transition agreement last month to cover the 21-month period after it leaves the European Union, concerns about Brexit have abated as investors focus on the state of the UK economy before the expected rate rise.
Markets expect the Bank of England to raise interest rates by 25 basis points next month as it tries to curb inflation.
The $1.43 mark is only the second time since the Brexit vote that the pound has reached this level. Although it is still well off the $1.49 level it traded at just prior to the vote, it is a strong sign that the British economy is performing well and that investors have a renewed level of confidence in it.
This is also backed by figures released by the Office of National Statistics this morning show that average wages went up by 2.8% over the past three months, which is below the inflation rate on 2.9%. Nevertheless, unemployment in the period fell by 16,000 to 1.42 million – the rate of 4.2% is the lowest since the three months to May 1975. The UK currently has record high levels of people in work with the latest statistic indicating that 32.2 million are now employed.
Tuesday has clearly been a strong day for the British economy.