The sterling is on the rise on Tuesday. The bulk of the support is definitely coming from weaker US dollar encouraging sterling to hit new highs. As for the greenback, the American currency is depressed now by lower state-bond yield, which can be a sign of upcoming recession in the USA. Today, the sterling-to-US dollar exchange rate soared above the 1.28 handle for the first time since late November. Moreover, the currency is trying to take roots on this level with the current price standing at 1.2826. The market has got several reasons for buying. In particular, the UK construction sector brought a surprise showing strong performance in November. The PMI hiked to 53.4 over the period under review, whereas the forecast was set at 52.5.
Additional upturn driver was the message of the advocate general of the European court saying that London can refuse from Brexit on a unilateral basis until the court makes a final determination. However, this scenario is unlikely to happen, but this move bolstered the sterling.
Nevertheless, the market may not rush to buy sterling, since its major challenge is ahead. In particular, the Brexit vote in the UK Parliament is slated for December 11. After that Theresa May can face unconfidence vote, so with persisting risks, the sterling is still attractive for sales on the rise. This means that the observed recovery may be a good chance for profit taking before these events.