FX roundup: Sterling rises on Trump win, hopes some MPs will vote against Brexit

Sterling pressed its foot to the floor on Friday and accelerated higher against most major crosses, helped in part by the US election result and obviously welcomed reports that some UK MPs are prepared to vote against triggering Brexit.

"What makes the pound's climb so extraordinary is not just that it is still technically hampered by the Brexit, but that despite this it is one of the few major currencies to take back any ground against the greenback," said Spreadex financial analyst Connor Campbell.

"This show of strength was in light of the higher inflation and higher interest rate predictions that have appeared in the last 24 hours," Campbell added.

At 17:11 GMT, sterling was up 0.43% to $1.2609 and up 0.89% to €1.1628. The dollar-spot index rose 0.3% to 99.084. The dollar gained 0.46% to €0.9222.

The dollar's turn north began Thursday as investors bet a Donald Trump presidency of the US would see global inflation kick higher. Markets are also pricing in a December rate hike by the US Federal Reserve.

All of this has produced a knock-on benefit for sterling, which had hitherto been humiliated on the world's stage since the UK's non-binding Brexit referendum to quit the EU.

Campbell observed on Friday that sterling's gains on the euro implied investors were now starting to sweat the political situation in the single-currency bloc.

"France especially (is) facing its own Brexit/Trump in the form of Marie Le Pen and next spring’s election," he said in a statement.

Jasper Lawler, market analyst at CMC Markets, said sterling's rise this week was partially helped by a shift in focus.

"The phenomenon of Donald Trump as US president-elect has put Brexit on the back-burner, allowing the pound to creep higher," he said.

Perhps not for long, with the UK Supreme Court due to begin hearing a case -- appealed by UK Prime Minister Theresa May's government after its successful High Court debut -- on royal prerogative and triggering Article 50 to begin Brexit.

Bubbling away in the background are sterling-positive reports that some MPs are prepared to vote against triggering the formal Brexit process, which only about one third of UK voted for, albeit a vocal third.

Liberal Democrat, Labour and SDLP MPs told the BBC they are willing to vote against invoking Article 50 in Parliament.

Lib Dem leader Tim Farron said his party would oppose Brexit unless promised a second referendum on the UK's deal with the European Union.

"The pound was expected to rise on last week’s realisation that Article 50 is now in the hands of Brexit-sceptic MPs, and with the US election now out of the way, we are seeing that pound rebound take shape," said IG's Johsua Mahony.

Returning to the crosses, sterling and the greenback advanced against commodity issues, namely the Australian, Canadian and New Zealand dollars, as well as South Africa's rand.

In economic data, Office for National Statistics said construction volumes fell by 1.1% in the third quarter, compared with the April-June period, marking the weakest performance since the third quarter of 2012. Still, this was less steep than the 1.4% drop expected.

Data from Destatis confirmed German inflation was at a two-year high in October. Consumer prices last month rose 0.2% from September and 0.8% from October last year, which is its highest level since October 2014. Meanwhile, the annual rate of inflation came in at 0.7%. This was in line with consensus and the original estimate.

In the European Union, consumer prices were up 0.2% on the month and 0.7% compared to October 2015.

Stateside, consumer sentiment improved more than expected in November, hitting its highest level since mid-2016, according to data released on Friday.

The University of Michigan’s preliminary US consumer sentiment index rose to 91.6 in November from 87.2 the month before and 91.3 in the same month last year, beating expectations for a reading of 87.5.