July 11, 2020

Brexit Trade Deal still drives the pound

LQDFX Forex news Blog | Brexit Trade Deal still drives the pound

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While the British economy is being gradually reopened after its coronavirus lockdown Brexit Trade Deal is still the main factor affecting the pound.

Doubts about whether Britain will seal a Brexit Trade Deal with the EU set to be the biggest weight on the British currency. Little progress has been made in agreeing Britain’s future trading relationship with the bloc.

The EU negotiator Michel Barnier highlighted the dim outlook for a breakthrough in Brexit talks on Wednesday. Comments on Thursday from his British counterpart, David Frost, injected no new optimism.

Money markets ramped up expectations of negative interest rates in the United Kingdom. Policymakers debate further steps to support the struggling economy.

Investors have also been cautious over fears of a second wave of coronavirus infections. The British Prime Minister Boris Johnson announced on Tuesday a significant easing of the lockdown in England.

Coronavirus cases rose across the United States by at least 39,818 on Thursday, the largest one-day increase yet. The governors of Texas and Florida put a pause on relaxing restrictions any further. The Trump administration has tried to soften nationwide concerns about the pandemic.

The pound was down around 0.2% against the euro at 1144 GMT at 90.53 pence. It had hit three-month lows against the single currency on Tuesday.

Versus the dollar, it was down around 0.3% at $1.2390, recovering a little after it touched $1.2377 at 0950 GMT.

Sterling showed one of the worst monthly performance among major currencies in June. It recovered 0.5% versus the dollar month-to-date, but lagged the broader market.

Further, the European Central Bank reaffirmed its dovish stance in the minutes of its policy meeting.

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Forex – Brexit Trade Deal still drives the pound

Markets showed signs of optimism, with the dollar falling, despite a record number of new COVID-19 infections in the United States.

The dollar struggled at U.S. coronavirus infections surged. Having risen between 0500 and 0700 GMT, the dollar fell in London, reaching 97.325 against a basket of currencies. The greenback is on track to end the week down around 0.4%.

Against the yen, the dollar traded at 107.09 yen, having gained 0.5% in the overnight session. It has held gains of 0.2% so far this week.

The Australian dollar fetched $0.6888, stuck in its $0.68-0.70 range in the past couple of weeks.

The riskier New Zealand dollar was up 0.2%, having spent most of June unchanged.

Against the dollar, the euro rose 0.1% to $1.12395 and is on track for its biggest weekly rise in three weeks. The euro’s gains and a surge of coronavirus infections in the United States meant the dollar struggled to gain traction.

In commodity markets, oil prices also rose, extending gains on optimism about a recovery in fuel demand worldwide.

U.S. West Texas Intermediate crude futures gained 20 cents, or 0.5%, to $38.92. Brent crude futures rose 31 cents, or 0.8%, to $41.36.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, Investing, CNN money