Post-Brexit trade deal appears imminent; USD weighed down by stimulus uncertainty.
The pound sterling is poised to hit last week’s multi-year high as Forex markets wait for confirmation that a Brexit deal has finally been signed. The transition period ends in one week and Forex traders are anxious to finally learn the outcome, with hopes that it is one that will shift sentiment to positive. Insiders in the UK government have said that the prime minister conducted a conference call late last night and that negotiators are scrutinizing the legal texts. Analysts point out that most traders and investors are withholding support for British assets simply because of the uncertainty; as a result, most assets have been undervalued but are likely to quickly gain favor once markets know that a deal is certain.
In London trading as of 10:58 am, the GBP/USD was trading higher at $1.3602, falling from the session peak of $1.36054, but keeping well off of the low which was recorded at $1.34866. The EUR/GBP was lower at 0.8965 pence, a loss of 0.6451%; the pair has ranged from a trough of 0.89526 pence to a high of 0.90407 pence. The GBP/JPY was higher at 140.9650 yen, a gain of 0.7888%.
Meanwhile, in the US, the greenback remains under pressure as uncertainty grows over the support package intended for those consumers and industries negatively impacted by the coronavirus. While a bill had been brought to the President for his signature, Donald Trump dismissed the $600 stimulus payment, suggesting that $2,000 was more appropriate. Without his approval, the package will not be passed. The spending bill will have to go back to Congress for further discussion. The US Dollar Index, used as a measure of the greenback’s relative strength, was trading lower at 90.2060, a loss of 0.23%. The EUR/USD was higher at $1.2197, up 0.0697%.