Spain’s support for soft Brexit strengthens sterling

THE pound has bounced back to its highest value against the dollar since the UK voted to leave the European Union, following reports that Spain and the Netherlands would be willing to support a soft Brexit deal.

Sterling gained almost 1.5 cents after Bloomberg reported that Luis de Guindos – the Spanish economy minister – and the Dutch equivalent Wopke Hoekstra met to discuss their concerns surrounding Brexit, as both nations have close trade and investment ties with the UK.

They allegedly agreed to keep discussing their common interests in the matter, while continuing to support the EU’s chief Brexit negotiator Michel Barnier.

Analysts have also suggested a broader weakness in the dollar has helped boost the pound.

The pound’s weakness following the Brexit referendum has put a strain on households by pushing up the cost of imported goods in the UK, causing inflation to rise from 0.5 per cent to 3.1 per cent by November 2017.

On the other hand, sterling’s decreased value has also made exports more desirable, with UK factories reporting an increase in trade for the eigth month in a row in November.