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POUND BOUNCES BACK: £ above $1.40 and its the longest winning streak since 2014

BRITISH Pound Sterling has bounced back to $1.40 and analysts believe pound can continue its advance.

The move to $1.40 represents the longest winning streak seen in the currency since 2014. “Sterling briefly poked above a major psychological level but its inability to make a convincing break prompted a wave of profit-taking,” says analyst Joe Manimbo with Western Union.

No doubt, the prime driver behind Sterling’s impressive rally is an improvement in sentiment with markets acknowledging that Brexit is not going to be the car-crash that was initially assumed.

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Markets are confident that a worst-case no-deal Brexit scenario will now be avoided and there is an assumption that the settlement of a two-year transitional period will be relatively straight-forward to agree.

“The recent report that the UK has “agreed in principle” to a “Norway-style” transition period with the EU supports our view that a transition agreement could be secured quickly to provide reassurance to businesses, households and financial market participants. A smoother Brexit outcome is a key assumption behind our outlook for a stronger pound in 2018,” says Lee Hardman at MUFG.

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