GBP/USD nears $1.33 amid Brexit optimism
Philip McHugh November 19th 2020 - 2 minute read
The pound continued to strengthen through Wednesday’s European session, amidst ongoing optimism over Brexit.
However, Sterling’s momentum appears to be faltering this morning, with GBP/EUR muted at €1.1163 and GBP/USD slipping to $1.3224. GBP/CAD is subdued at C$1.7314, while GBP/AUD and GBP/NZD hold steady at AU$1.8154 and NZ$1.9173, respectively.
Coronavirus headlines are set to remain the focus for currency traders today as surging global cases continue to unnerve investors.
What’s been happening?
The pound continued to trend higher through yesterday’s trading session, with Sterling sentiment still being bolstered by lingering Brexit optimism.
This comes amid growing hopes that the UK and EU are close to reaching a post-Brexit trade deal, with reports suggesting that France is willing to compromise regarding fishing rights, meaning a major hurdle in talks may have potentially been cleared.
In addition, the uptrend in GBP exchange rates was also supported by the publication of the UK’s latest consumer price index, which reported a stronger-than-expected rise in inflation last month.
Meanwhile, the publication of the Eurozone’s own CPI figures left the euro struggling to find momentum on Wednesday as October’s finalised figures confirmed that the bloc remained in a state of deflation, with another 0.3% contraction in prices.
At the same time, the US dollar also faced an uphill battle yesterday as USD investors grew increasingly concerned by the skyrocketing number of coronavirus cases throughout the US, which has forced more governors to reluctantly begin re-imposing lockdown measures.
What’s coming up?
Turning to today’s session, we can expect coronavirus concerns to continue dominating market sentiment, likely infusing fresh volatility into the currency market.
Rapid rising case numbers in the US are likely to remain a key concern, which alongside another week of elevated US jobless claims could put exert pressure on the US dollar.
In Europe, a speech by European Central Bank (ECB) President Christine Lagarde may offer fresh impetus to EUR investors this morning, although coronavirus developments will also be eyed and could potentially put pressure on the euro if the situation remains bleak.
For GBP investors, the spotlight will likely remain on Brexit ahead of the upcoming EU summit, in which the EU’s chief negotiator Michel Barnier is expected to update EU leaders on the current state of talks.