Fundamental Comment

Pound rises on Brexit hopes, dollar weakness

Pound rises on Brexit hopes and dollar weakness

The pound resumed its rise versus the U.S. dollar on Wednesday, trading near its highest level in two weeks, amid hopes of Brexit deal after European Commission president Ursula von der Leyen mentioned that progress is being made.

The GBPUSD pair is currently trading at 1.3503 after touching a high of 1.3521, the highest level since December 4. 

“I can tell you that there is a path to an agreement now,” Von der Leyen said. “We have found a way forward on most issues but two issues still remain outstanding… the next days are going to be decisive.”

Optimism about a Brexit deal, US stimulus and the rollout of the Covid-19 vaccine have helped improving investors’ sentiment and drove them towards risky assets. 

Regarding economic data, U.K. Composite PMI, tracking the performance of both manufacturing and services sectors, returned to the expansion zone as it recorded 50.7 in December, following a reading of 49.0 in November, yet it came below projections of 51.3.

Another report from the U.K. showed a slight increase in inflation in the year ended November by 0.3 percent, coming below estimates of 0.6% soar. 

On the other hand, the dollar has come under pressure amid rising chances of seeing a U.S. Covid-19 relied aid soon, and on anticipations the Fed may ease its monetary policy further today to help the economy overcome the repercussions of the pandemic. 

The dollar index, which tracks the green currency’s movements versus a basket of major currencies, extended its fall for a third straight session on Wednesday, hitting its lowest level since April 2018. 

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