Pound Rallies on Brexit Optimism, Later Falls on FOMC Decision

The  British pound today rallied higher against the  US dollar amid optimism that the  UK would not crash out of  the  EU after Boris Johnson toned down his rhetoric. The  GBP/USD currency pair’s rally was also driven by  the  dollar’s selloff coupled with the  upbeat UK inflation data released earlier today, which boosted the  pound.
The  GBP/USD currency pair today rallied from a  low of  1.2875 in  the  Asian market to  a  high of  1.3007 during the  American session and  was trading near these highs at  the  time of  writing.
The  currency pair’s initial was driven by  favourable market sentiment after the  British PM reassured leaders of  his commitment to  getting a  post-Brexit trade deal with the  EU. The  release of  the  upbeat British consumer price index report for  August also drove the  pair higher. According to  the  UK’s Office for  National Statistics, the  country’s headline inflation rose 0.2% versus the  expected 0% print, while the  core print also beat analysts expectations. The  disappointing retail price index, combined with the  producer price index, could not derail the  pair’s ascent.
The  pair later fell in  the  afternoon as  Boris Johnson said that he does not believe the  EU is negotiating with good faith. The  pair fell as  MPs quizzed the  Prime Minister about the  rising coronavirus cases in  the  UK. The  US FOMC rate decision also contributed to  the  pair’s decline.
The  currency pair’s future performance is likely to  be affected by  tomorrow’s Bank of  England monetary policy decision.
The GBP/USD currency pair was trading at 1.2947 as at 19:32 GMT, having risen from a low of 1.2875. The GBP/JPY currency pair was trading at 135.96, having fallen from a high of 136.47.
If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.