GBP hit 1.4355 high on Tuesday, gaining its topmost level since the Brexit referendum in June 2016. Investors are optimistic about a better Brexit deal and a central bank rate hike.
The surge in the value of the pound is being associated with higher UK rates outlook and lower Brexit-related tension. Analysts predict a 74% hike rate at the Bank of England’s May meeting and a sum of 37.15 bps of rate increases by this year’s meeting in December.
Rate hikes will take place if the United Kingdom wage growth number surpasses estimates. GBP rally may also cease once trade discussions on Britain’s EU post-Brexit relations reach a deadlock.
Prices of gold remained stable on Tuesday as the US dollar continued to slip with the market worrying over growing US-China trade tensions. Spot gold remained at $1,345. 62 per ounce as of 0322 GMT.
"Despite a quieting of negative headlines overnight, it's unlikely we've seen the last of China trade tensions or a weaker U.S. dollar for that fact. All of which continues to provide the most apparent reasons to own gold," said Asia-Pacific trading head Stephen Innes for OANDA in Singapore.
In the forex market, USD fell 0.1 percent against its Japanese counterpart at 107.03, from its seven-week high of 107.78 yen on Friday as traders prepare for a dialogue between US President Donald Trump and Japanese Prime Minister Shinzo Abe in Tokyo on Tuesday. The dollar index, which measures USD against various currencies, also relaxed to 89.371 earlier, after a 0.4 percent decline on Monday.