Viraj Patel, currency strategist at Dutch bank ING noted that “2018 is very much a different Brexit trading environment for the pound,” compared to the last year and a half of pain following the UKs vote to leave the EU back in June 2016. Several factors have played a role in this recent resurgence, ranging from increased market confidence that the UK and EU can strike a Brexit deal, to falling confidence in the agenda of US President Trump.
Britains better than expected economic performance in the last 18 months has also boosted sterling in the first quarter of 2018.
“Gone are the days of noisy Brexit headlines stirring sharp – and almost sentimental rather than fundamental – knee-jerk moves in the currency, with the buffer of last months Brexit transition deal buying GBP investors some extra time to assess the Brexit facts,” Patel wrote.
The pound has shifted from trading on political developments around Brexit, and moved towards trading on cyclical factors like data, which provide a view of the state of British economy.