Pound (GBP) Rises as ‘More Positive Tone’ Surround Brexit Talks

Published: 28 Sep at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound (GBP)

The Pound (GBP) edged higher today on hopes of a post-Brexit trade deal between the UK and the EU. Tomorrow will see Brexit negotiations resume, sparking hopes of a last-minute compromise between the two powers.

John Hardy, an analyst at Saxo Bank, said that there is a ‘more positive tone’ surrounding the negotiations, adding:

‘The Brexit talks are set to get more formal this week and starting tomorrow, with this round seen as a last dash effort if any agreement is to be made on Boris Johnson’s timeline aiming for mid-October agreement.’

Meanwhile, the Bank of England’s (BoE) Deputy Governor, David Ramsden, dampened suggestions that the Bank could impose negative interest rates.

Euro (EUR)

The Euro (EUR) struggled today after the European Central Bank’s (ECB) president, Christine Lagarde, appears to be divided as the bank continues to split over Europe’s response to the coronavirus crisis.

Single currency investors are also becoming increasingly concerned over Europe’s rising Covid-19 infection rate.

As a result, EUR investors are remaining cautious as this could derail the Eurozone’s economic recovery throughout the autumn and winter months.

US Dollar (USD)

The US Dollar (USD) suffered today following reports that the Chinese economy is improving, with recent data showing an uptick in manufacturing and industry. Consequently, the safe-haven ‘Greenback’ has suffered from a sell-off in favour of riskier assets.

Additionally, tomorrow’s US Presidential election debate has sparked volatility in the US Dollar as American political uncertainty increases.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) has continued to be undermined by growing concerns over oil demand. As a result, this has weakened the commodity-correlated ‘Loonie’.

Philip Streible, a Chief Market Strategist at Blue Line Future LLC, Chicago, said that there are growing ‘concerns about the stalling [global] economic recovery’.

However, he added, demand for oil would pick up on hopes of a Covid-19 vaccine: ‘[T]hat’s when you’re going to start to see demand pick up’ and oil prices rally.

Australian Dollar (AUD)

The Australian Dollar (AUD) has benefited from an improvement in China’s economy. With China being Australia’s biggest trading partner, this has reignited hopes for Australia’s economic recovery in the coming months.

However, Australia’s Prime Minister Scott Morrison’s recent comments about the world’s nations coming together to know more about the origins of Covid-19 has sparked concerns that Australia-China relations could worsen.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) gained on renewed hopes in China’s economic recovery, with China – like Australia – being New Zealand’s largest trading partner.

However, ‘Kiwi’ investors are remaining cautious after the Reserve Bank of New Zealand (RBNZ) has signalled that it could further ease its interest rates.

As of Monday, 28th September 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1008, GBP USD exchange rate was 1.2846, GBP AUD exchange rate was 1.8147, GBP NZD exchange rate was 1.9591, GBP CAD exchange rate was 1.7172, and GBP CNY exchange rate was 8.7503.

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