Pound to US Dollar Exchange Rate Recovers to Week’s Opening Levels
While it seemed yesterday as if the Pound Sterling to US Dollar (GBP/USD) exchange rate was starting out the week on a bearish note, the pair quickly recovered yesterday’s losses overnight. The Pound (GBP) has been boosted by fresh Brexit hopes.
Following last week’s impressive 3-cent surge for GBP/USD, the pair opened this week at the level of 1.2651.
Brexit hopes lightened yesterday and GBP/USD briefly dipped to a low of 1.2532, before recovering those losses overnight and trending close to the week’s opening levels again at the time of writing on Tuesday morning.
GBP/USD is currently only slightly below last Friday’s 3-month-high of 1.2685.
Pound (GBP) Exchange Rates Find Support in EU Negotiator’s Fresh Brexit Comments
When markets opened on Monday, Sterling was dragged lower by speculation that markets were over optimistic about the chances of a Brexit deal last week.
With mere days until the anticipated EU Summit, and both sides saying much work still needed to be done, investors reassessed the Pound’s impressive gains and the British currency tumbled.
However, overnight the Pound’s movement steadied again and the British currency found fresh support this morning, recovering yesterday’s losses against many rivals including the US Dollar (USD).
Michel Barnier, the EU’s Chief Negotiator, said today that an agreement over Brexit was still possible as soon as this week. Speaking to reporters, Barnier said:
‘Even if an agreement has been difficult, more and more difficult, it’s still possible this week.
Reaching an agreement is still possible. Obviously, any agreement must work for all. The whole of the UK and the whole of the EU. Let me add also that it is high time to turn good intentions in a legal text’
US Dollar (USD) Exchange Rates Remain Mixed as Investors Await Trade Details
The US Dollar has seen mixed movement since markets opened this week, making it more difficult for the currency to sustain gains against a weaker Pound yesterday.
Demand for the safe haven US Dollar was supported slightly as fresh doubts emerged about the US and China’s latest trade negotiations.
News that a ‘Phase 1’ preliminary deal had been reached were met with mixed response as China indicated it wanted more talks before fully agreeing to it.
Due to the trade war’s impact on the US economy, other safe havens like the Japanese Yen (JPY) benefitted more from the news.
Still, the US Dollar isn’t exactly weak either, and this morning’s US empire state manufacturing PMI beat forecasts which offered the currency some support and limited the GBP/USD recovery.
Pound to US Dollar (GBP/USD) Exchange Rate Anticipates Brexit Developments
While there are some key US ecostats due for publication in the coming days, the most notable Pound to US Dollar (GBP/USD) exchange rate movement over the past week has been caused by Brexit speculation and that much is likely to continue.
With the EU Summit due to be held towards the end of the week, and officials saying a deal may still be possible as soon as this week, the Pound will drive significant movement depending on how this unfolds.
If a Brexit deal really is reached, the Pound could surge. Its gains would likely be limited by concerns of possible opposition in UK Parliament.
On the other hand, if UK-EU talks are perceived as going poorly, or if they appear close to collapse, the Pound could shed much more of last week’s gains.
US Dollar investors will be focusing on US data in the coming sessions, which could give the currency direction amid mixed US-China trade sentiment.
September’s US retail sales and production stats, due tomorrow and Thursday’s respectively, could cause Pound to US Dollar (GBP/USD) exchange rate movement.