British Pound Rallies on Brexit Progress Despite Weak UK Macro Data

The  British pound today rallied higher against the  US dollar from the  early European session as  it emerged that the  European Union and  the  UK were about to  reach a  Brexit deal. The  GBP/USD currency pair was further boosted by  the  fact that the  US warned China against devaluing its currency, which did not favor the  greenback.
The  GBP/USD currency pair today fell to  a  low of  1.3134 before rallying to  a  high of  1.3210 following the  Brexit and  trade war headlines.
The  currency pair was initially weighed down by  the  release of  several disappointing macro reports by  the  UK’s Office for  National Statistics earlier today. The  ONS released the  UK’s trade data for  August, which recorded a  bigger deficit than expected. The  industrial production data beat expectations by  coming in  at  0.2% versus the  expected 0.1%. The  manufacturing production data and  the  construction output prints both came in  lower than expected. UK GDP growth estimates remained flat in  August as  compared to  the  expected 0.1% growth, which also dragged the  pair lower.
The  pair reversed its downtrend after the  EU’s chief negotiator Michel Barnier confirmed that 85% of  the  Brexit deal was already finalized. US Treasury Secretary Steven Mnuchin‘s warning to  China also boosted the  cable. A  hawkish speech by  the  Bank of  England‘s Andy Haldane also boosted the  pair.
The  currency pair’s future performance is likely to  be affected by  Brexit headlines and  macro data from both the  UK and  the  USA.
The  GBP/USD currency pair was trading at  1.3205 as  at  16:08 GMT having rallied from a  low of  1.3134. The  GBP/JPY currency pair was trading at  148.83 having dropped from a  high of  149.30.

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