The pound has jumped above $1.40 to a fresh post-Brexit high

• 
  Sterling climbs above the psychologically significant
  1.40 level against the dollar.
  


• 
  It first peaked above that level overnight, before
  retreating, but hit $1.40 again at around 4.00 p.m. on
  Tuesday.
  


• 
  The pound has rallied aggressively during 2018, and is
  the best performing G10 currency over the past six
  months.
  

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LONDON — The
pound moved to its highest level against the dollar since
Britain voted to leave the European Union in June 2016 on
Tuesday, climbing above the psychologically significant level of
$1.40 in the process.

By just after 4.00 p.m. GMT (11.00 a.m. ET) sterling has climbed
to $1.4020, a gain of 0.27%. The pound had briefly climbed above
$1.40 overnight, but slipped into the European morning and spent
most of Tuesday hovering around $1.3950.

Here's the chart:

Markets
Insider

"The British Pound attracted most of the traders’ attention
after breaking above $1.4 earlier today. The 1.4 is not only a
psychological level, but it has also been considered a key
support level during the past three decades prior to the Brexit
vote," Hussein Sayed, chief market strategist at forex firm FXTM,
said in an email on Tuesday morning.

While most analysts expected sterling to post gains during 2018,
the speed at which it has appreciated early in the year has
confounded expectations. The currency is up by almost five cents
against the dollar since the beginning of the year, and is the
best performing of the G10 basket of major currencies over the
past six months.

It may seem as though sterling's rise reflects growing confidence
that the UK and EU will be able to strike a Brexit deal
beneficial to both parties — and to a certain extent that is
true. However, much of the appreciation is down to the
continually weakening dollar as investors worry about the future
direction of the US economy under the Trump presidency.

The recent government shutdown has only served to exacerbate
those concerns.

Should weakness in the dollar continue, ING FX strategist Viraj
Patel believes that sterling could reach $1.53 this year,

a level higher than the days before the referendum.

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