The British pound is up against the US dollar on Thursday as the greenback continues to pullback in the days after the rate cut from the Federal Reserve and as the rising number of coronavirus cases in the United States ratchets up concern for the US economy.
GBP/USD was higher by 47 pips (+0371%) at 1.2917 with a daily price range of 1.2860 to 1.2937 as of 3pm GMT. A push higher in the European trading session saw the currency pair move back above 1.29 for the first time in a week. Weekly gains stand at +0.78%.
The pound
Brexit talks have started and EU Chief Brexit negotiator made some remarks on Thursday to the media that had a slight bearing on the pound, but a broader trend of dollar weakness meant cable moved higher.
The shortness of the time from which to negotiate a deal is clearly a source of frustration for the EU, though most, including Barnier admit it is doable. There is still a possibility that the Bank of England conducts an emergency rate cut today or tomorrow, but the timing would be odd before next week’s UK budget. The pound is a little softer this week, since irrespective of the timing an interest rate cut looks almost a given in Great Britain.
The dollar
California reporting a state of emergency has raised a red flag for investors who on Thursday were back to selling US shares and the dollar. Haven demand was concentrated into the Japanese yen and Swiss franc. Congress has approved $8bn in funding to the fight coronavirus but it might come as too little too late if the outbreak has already begun.
The dollar was tracking the movement in US Treasuries where the US 10-year Treasury yield fell back below 1% to 0.96%. Markets are increasingly expecting the Federal Reserve will have to do more than the emergency rate cut of 50 basis points this week. Markets are now pricing a 70% chance the Fed cuts another 50 basis points at the scheduled March meeting in two weeks.
