Pound Swings as Traders Brace for a Breakdown in Brexit Talks
Pound traders are positioning for a choppy ride as trade negotiations between Britain and the European Union reach a watershed moment.
The currency suffered its biggest drop in close to three weeks after the EU’s chief negotiator Michel Barnier said a deal wasn’t guaranteed, while the relative cost of hedging against a weaker sterling climbed to a nearly seven-month high. The pound fell as much as 0.6%, it’s biggest drop since Nov. 12, to $1.3339. It briefly matched a three-month high earlier in the session, with officials racing to strike a deal before the start of next week.
Dollar Down, but Hopes Remain for More Fed Monetary Easing Measures
he dollar was down on Tuesday morning in Asia, starting the new month on a lower note even after closing its worst month since July in November. Giving the dollar a boost, however, was the expectation of more monetary easing measures from the U.S. Federal Reserve.
Promising data from COVID-19 vaccine developers have driven investors towards riskier currencies and higher-yielding assets outside the U.S., leading to a shortage of dollars.
Dollar Weakens; Stimulus Expected to Combat Pandemic
The dollar weakened in early European trade Friday, set to post weekly losses with traders expecting large-scale stimulus from the new administration to combat the Covid-19 pandemic
The dollar is back at its 2018 lows with DXY [the Dollar Index] breaking below the key 92.00 support,” said analysts at ING, in a research note, stating that the pandemic “appears particularly concerning as major U.S. cities are experiencing large spikes in cases which may fuel further speculation that President-elect Joe Biden will opt for tougher restrictions once he takes office.
Dollar Down, With Improving Risk Sentiment Setting Stage for Weekly Losses
The dollar was down on Friday morning in Asia, holding steady amid small market moves. However, it looks set to see weekly losses as improved risk appetite continue to apply pressure.
The U.S.Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 91.983 hovering near a three-month low seen overnight.
The USD/JPY pair was down 0.23% to 104.02.
The AUD/USD pair inched down 0.01% to 0.7360, after climbing to a near three-month high on Thursday. Across the Tasman Sea, the NZD/USD pair edged up 0.11% to 0.7013.
The GBP/USD pair inched up 0.03% to 1.3359. The pound saw a near three-month high as well on Thursday, with investors look towards progress on Brexit talks between the U.K. and the European Union (EU). EU chief negotiator Michel Barnier is reportedly due to speak with some EU fisheries ministers later in the day to discuss the current state of the trade discussions.
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Pound Rises as Vaccine Progress, Brexit Optimism Bolster Outlook
The pound rallied the most among major peers as signs the U.K. and European Union are close to agreeing a trade deal, and the latest progress in the development of a coronavirus vaccine added to optimism over the currency’s prospects.
Sterling rose as much as 0.8% to $1.3381, extending an advance that sent the currency to the highest level since early September. The pound climbed as much as 0.6% against the euro.
EURJPY Bounces Off a Key Resistance Level, Further Reduction Envisaged
The increase in the bearish momentum will decrease the price further to the support level of $123. The breakdown of the $123 level will expose the price to the $121 and $120 support level. In case the bearish momentum fails to break down the $123 level, then, the price will bounce and face the resistance levels of $124, $121, and $120. Key Levels: Supply levels: $124, $125, $126 Demand levels: $123, $121, $120
EU says Brexit deal still 'metres from the finish line'
The European Union and Britain have made better progress towards a trade deal in the last few days but there is still a lot of work to do for an agreement to be in place by the end-year deadline, the bloc's chief executive said on Friday.
Diplomats briefed earlier by the EU's executive, which is negotiating with Britain on behalf of the 27 member states, said Brussels and London remained at odds over fishing rights, fair competition guarantees and ways to solve future disputes.
Dollar Weakens as Consumers Lose Confidence; Pound Gains on Possible Deal
The dollar edged lower in early European trade Wednesday, weighed by signs the surge in coronavirus vases is hitting the U.S. consumer while the country’s political scene remains divided.
At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 92.245. EUR/USD climbed 0.2% to 1.1883, USD/JPY fell 0.3% to 103.91, while the risk sensitive AUD/USD rose 0.1% to 0.7304.
GBP seems a little tired of the stop-start nature of this news,” ING added, “but we would back cable on the soft dollar story and favor a rally back to recent highs at 1.3310.”
The currency could strengthen to $1.35 by mid-2021 if the two sides negotiate a free trade agreement, according to a Bloomberg survey of analysts, a level not seen since December 2019