The British pound is up against the US dollar on Tuesday as the greenback pared recent gains as a haven and Sterling rose as the EU released its mandate for UK trade talks.
GBP/USD was higher by 67 pips (+0.51%) at 1.2986 with a daily price range of 1.292 to 1.299 as of 2pm GMT. GBP/USD twice tried to move test 1.30 but failed 10 pips shy of it. Weekly gains stand at 0.10%.
GBP benefited from normalising sentiment across markets after Monday’s market sell-off
The EU publishing its Brexit mandate was largely ignored by markets, where there is an understanding that these are just the starting potions. The EU is seeking level playing field guarantees that force the UK to follow EU regulations in exchange for frictionless trade.
The UK distributive trades survey is not typically a market mover, and missed expectations were not a big driver for Sterling on Tuesday. The reading came in at 1% rather than the 4% expected. It was quite a significant miss but there were some highlights beneath the hood. A rise in retail business investment intentions to the highest since Q3 2010 is an encouraging sign that the conclusion of Brexit after the UK general election has added come clarity for businesses.
The dollar
The pullback in the dollar on Tuesday were the same forces that the saw Sterling make up some ground. Sentiment has stabilised as it relates to the COVID-19 outbreak, but markets remain twitchy as the number of new cases outside China continues to grow. Despite early signs the US economy has been affected, the dollar is still acting as a haven when markets show signs of worry about the coronavirus.
Several Chinese provinces have cut virus emergency levels, adding to signs the spread in China is starting to plateau. With other counties now seeing the biggest growth rate in cases, governments are starting to announce plans to counter it with US President Trump asking Congress for funding of $2.5 billion United States.
