Pound rally to face test
The pound’s best run against the euro since 2016 will be tested this week (ending 20 September) as leaders from Britain and the European Union seek to make progress in breaking the Brexit deadlock.
Sterling has climbed for five weeks against the common currency, rallying on the slightest hints of Brexit compromise. With British Prime Minister Boris Johnson now scheduled to meet European Commission President Jean-Claude Juncker Monday (16 September) to discuss the “rough shape” of a divorce deal, pound traders will be watching for some evidence of a potential solution.
The British currency has also recovered against a weaker dollar to above USD1.24, after plunging to a two-year low under USD1.20 earlier this month on fears of a no-deal Brexit. The latest leg higher came after reports that the Northern Irish Democratic Unionist Party would accept a new customs agreement to replace contentious Irish border proposals that have been the sticking point in talks, even though party leaders later disputed that.
The pound has proven resilient following a week where the UK Parliament was suspended and the government’s “Operation Yellowhammer” report warned of the potential disruption from a no-deal Brexit. – Bloomberg News.
The US Dollar Index (DXY) fell 0.19% to 98.072 on Friday (13 September), the pound inched 1.35% higher to USD1.2501, and the euro rose 0.07% to USD1.1073. The yen increased 0.01% to 108.09 per dollar.
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