GBP/USD: Above 1.31 as UK-US Huawei Tensions Ease

The British pound is higher against the US dollar on Friday afternoon as tensions between the UK and US over the use of Huawei 5G network equipment calm downed, paving the way for trade deal between the two nations sometime after Brexit has officially happened at 23:00 GMT tonight.

GBP/USD was higher by 38 pips (+0.29%) at 1.3094 with a daily price range of 1.308 to 1.314 as of 1.30pm GMT. The currency pair had stalled just short of 1.31 on Thursday but took the level out in early trading on Friday, leaving near a 1-week high.

GBP/USD – The dollar

The pound got a lift against the dollar as Mike Pompeo, US secretary of State said the special relationship between the UK and US was “not at risk” during a press conference with UK foreign secretary Dominic Raab. There had been a stand-off between the two nations over the use of Huawei fifth generation (5G) mobile network equipment. The UK government decided to give Huawei a “limited role” in building its 5G networks, much to the dismay of Washington DC. Pompeo remarked: “Good friends don’t always agree on everything”.

GBP/USD – The pound

Today is so-called ‘Brexit Day’ and it is a big occasion for both the United Kingdom and the European Union. But is unlikely it will have any effect currency markets since it has been an inevitability ever since the decisive election result for Boris Johnson’s Brexit-supporting Conservative Party in December. FX markets will be closed when Prime Minister Boris Johnson makes a speech at 22:00 GMT and Britain exits the European Union at 23.00 GMT this evening.

More recently, the pound has been moved by speculation before yesterday’s decision on UK interest rates. The UK economy, like many parts of the world had been slowing into the 2019, not helped by the political uncertainty surrounding Brexit. Not one to shy away from controversy, the Governor of the Bank of England suggested there might soon be cause to lower interest rates two weeks prior to his final meeting as Governor. The pound softened as investors priced in a rate cut but has since recouped all the losses

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