FX round-up: News of Brexit White Paper, CBI survey boost Sterling

Sterling was stronger across the board following news the Prime Minister would publish a White Paper outlining the government´s approach regarding Brexit, which would help Parliament to scrutinise it, and after the release of stronger than expected industrial sector data for January.

As of 1505 GMT, cable was higher by 0.66% to 1.2586, with the pound up by a similar magnitude against the Japanese and changing hands at 143.06.

In parallel, the single currency was 0.64% lower against the pound to 0.8526.

Boosting Sterling further, the Confederation of British Industry´s total orders balance jumped from a reading of 0 for December to +5, which was substantially above its long-term average, amid what economists described as "healthy" readings on domestic demand and a marked increase in a gauge of export orders, from -15 to -9.

On the flip side, a barometre of how many producers expected to raise prices over the following three months increased from +26 in December to +28 — the highest level since April 2011.

"This suggests that producer output price inflation will pick up to about 6% soon, from 2.7% in December, and will boost shop prices later this year. We doubt that order books will look as healthy as they do now after manufacturers have increased their prices sharply," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The other major crosses on the other hand were little changed, with euro/dollar fractionally higher by 0.02% to 1.0735 and US dollar/yen down 0.1% at 113.64.

The US dollar spot index was lower by 0.21% at 100.14.

"Currently there are signs that the USD may have peaked already.

"However, investors now need to see the detail as to how these policies will be drafted, the impact on the budget deficit and the extent to which Congress is on board. Without this detail USD bulls are unlikely to regain the upper hand. Also weighing on optimism is the fear that Trump’s protectionist pledges could be detrimental to growth – a factor that the market chose to overlook in the immediate aftermath of the US election," said Jane Foley, Senior FX Strategist at Rabobank.