- GBP/USD rose to one week top.
- The dollar suffers as the fiscal impasse, bond-yield slide, and risk-on mood continues.
- The UK-EU talks fire optimism.
The Cable traded near 1.3100 without much gain or loss on Monday, supported by the continued dollar weakness and Brexit talk’s optimism. The hope of successful talks got a boost on Thursday when Britain’s chief negotiator David Frost mentioned a probable agreement by September. At the same time, the continued roadblocks before the next fiscal stimulus deal weakened the dollar. The US Treasury Yields also declined in a risk-on market environment, adding to the dollar weakness.
The selling of the dollar didn’t reverse, even though Monday’s Empire State Manufacturing Index numbers vastly underperformed market expectations, tumbling to 3.7 in August from the 17.2 previous.
The global risk affinity has got a new leg with the chances of a new coronavirus drug brightening in recent days. The market also welcomed the postponement of the US-China trade review as the deal would be intact, for some time at least. Washington’s move against China’s Huawei Technologies, aimed at blocking the company’s access to commercially available chips, failed to hamper the bullishness.
The bearish pressure on the US dollar continued today and pushed the GBP/USD to a one-and-half week top around 1.3145, during the Asian session. The market will now tune to the Brexit talks in Brussels later today. The news bits from the negotiations will be critical for the pair. As the two sides are keen to have a positive outcome, any positive sign can push the GBP further up in the continuation of its bull run since hitting the lows, mid-1.2200s, in late June.