January 24, 2018 / 9:10 AM / a year ago

Sterling powers to new high since Brexit vote, nears $1.41

FILE PHOTO - British Pound Sterling banknotes are seen at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger

LONDON (Reuters) - Sterling shot to a fresh post-Brexit-vote high close to $1.41 on Wednesday, extending a recent rally that has seen confidence in the British currency recover.

The pound climbed as much as 0.6 percent to $1.4090, its highest level since Britain’s vote to leave the European Union in June, 2016. Against the euro, the pound was up 0.3 percent at a five-week high of 87.615 pence.

Analysts said there was no specific news that triggered Wednesday’s move, but a continuation of the recent trend higher on the back of growing confidence Britain can secure favourable terms for departing the EU, as well as broad dollar weakness.

Traders are also positioning ahead of UK unemployment data due at 0930 GMT.

“Certainly dollar weakness is a part of this move higher. But this is also a story of sterling resilience,” said Jane Foley, a London-based FX strategist at Rabobank.

Foley noted that sterling, the second best performing of the G10 currencies so far in 2018, has also held its own against the euro at a time when the single currency is enjoying strong demand - a sign sterling-specific factors were helping drive the pound.

With the risks of a disorderly exit from the EU receding, investors are looking for signs the Bank of England could hike interest rates more than the single raise this year that the market has currently priced.

Against the currencies of its biggest trading partners, sterling is at its highest level since mid-2017, but remains far below levels seen before the Brexit vote.

Reporting by Tommy Wilkes; Editing by Jemima Kelly

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