Sterling recovery hinges on how soft Brexit proves to be

A key development in foreign exchange markets in the past month has been that the euro has broken out of the relatively narrow trading range of $1.04-$1.16 against the dollar that it had occupied since early 2015.

The euro made impressive gains against the dollar in the first half of the year, climbing from $1.04 to above the $1.14 level, despite further rate hikes by the Federal Reserve in March and June.

The euro’s rally gained further momentum in recent weeks, as it climbed to near $1.19, its highest level since January 2015.