GBP/USD Exchange Rate Consolidates Gains amidst Brexit Optimism
The Pound US Dollar (GBP/USD) exchange rate remains on the front foot this morning, with the pairing buoyed by hopes the UK and EU could still reach a Brexit deal.
At the time of writing the GBP/USD exchange rate is trading at around $1.2452 this morning, consolidating its gains after jumping almost 2% during yesterday’s session.
Has the Pound (GBP) Got Further to Rally as Barclay-Barnier Meeting in Focus
The Pound (GBP) put in a spectacular performance on Thursday, rallying almost 2% against the US Dollar (USD), its largest single day rise in over six months.
This surge was triggered by an unexpectedly positive meeting between Boris Johnson and his Irish counterpart Leo Varadkar, with a joint statement by the leaders suggesting they could see a ‘possible pathway’ to a Brexit deal.
So far no details of the meeting have been released, leaving markets largely in the dark as to what may have been offered, outside rumours of concessions from the UK.
Still this was a major turnaround from earlier in the week when talks were thought to be on the verge of collapse and was enough to send Sterling skyrocketing.
The real question now is whether or not the EU will share in Ireland’s optimism as Brexit talks now resume in Brussels.
Brexit secretary Stephen Barclay will meet with the EU’s chief negotiator, Michel Barnier this morning to see whether there is the basis for a deal following Johnson and Varadkar’s meeting.
Should the EU appear receptive then another rally of over 1% in GBP/USD may not be out of the question.
US-China Trade Optimism to Limit Upside in US Dollar (USD)?
Meanwhile across the pond, the focus is on high-level US-China trade talks currently underway in Washington.
So far reports regarding the talks have been largely positive, with US President Donald Trump declaring the talks are going ‘very well’.
In response we saw the US Dollar (USD) tumble on Thursday as the optimism on trade limited demand for the safe-haven currency.
Chinese Vice Premier Liu He will meet with Trump at the White House later today, amid reports the two side are close to reaching a partial trade deal. Such an outcome could put more pressure on USD exchange rates.
However there is still the risk that talks could break down as they have in the past, with the US Dollar subsequently rallying as investors seek to dump risk-sensitive currencies.
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