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Recovery in US dollar pushes sterling lower

Recovery in US dollar pushes sterling lower

The recovery levels of the US dollar index against major currencies on Friday added more negative pressure on the British pound and pushed it to its lowest level in three weeks, amid rising concerns about a no-dear Brexit. 

The dollar index, which measures the performance of the federal currency against a basket of 6 major currencies, recorded its lowest level in four sessions at 90.61, before returning to recovery again to hit a high at 90.99.

The pound sterling fell against the dollar for the second day in a row, to its lowest level in three weeks at 1.3183, after it opened today's trading at the level of 1.3284, and is currently trading at the level of 1.3226. The pound is heading to record its first weekly decline after five weeks of gains.

On Thursday, an advisory committee to the US Food and Drug Administration recommended approval of the Covid-19 vaccine produced by the US company Pfizer for emergency use, paving the way for vaccinations to begin in America, likely as soon as next week.

This comes with the rise in coronavirus cases in the United States, which have affected businesses across the country, pushing jobless claims to their highest level since September, indicating the economic damage caused by this increase in Covid-19 cases.

This fading optimism about U.S. stimulus deal before a December 11 deadline for government shutdown helped the US dollar to recover today, but the negative pressure on it remains large in the currency markets, as it is the safe-haven currency that investors abandon with the first feeling of reassurance in the markets.

As for the pound sterling, British Prime Minister Boris Johnson said late Thursday that there was a "strong possibility" that Britain and the European Union could fail to conclude a trade deal on Brexit.

The British pound has fallen by more than 1% so far this week as negotiations between the UK and the European Union to agree on a trade deal worth more than $1 trillion in annual trade have proven so far ineffective.

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