- Pound (GBP) rallies on hopes that the legal test of the Brexit trade bill is will be written this week
- BoE’s Ramsden distances the central bank from negative rate talk
- US Dollar (USD) eases back on broad upbeat mood
- US Trump – Bidden live debate in focus
The Pound US Dollar (GBP/USD) exchange rate is extending gains for a third straight session. The pair settled on Monday 0.5% higher at US$1.2827, after hitting a high of US$1.2927. At 06:15 UTC, GBP/USD trades +0.3% at US$1.2860, close to the high of the day.
The Pound is trading on the front foot, boosted by Brexit trade deal optimism. A report in the Times says that the EU have revealed that they are ready to begin working on the joint legal text for a post Brexit trade agreement.
Both sides have made concessions ahead of the 9th round of trade talks which begin today and will run until Friday. This means that the two sides are on the final straight towards agreeing a deal before the UK government’s self-imposed deadline of 15th October.
The Pound is also being supported by Bank of England Deputy Governor David Ramsden after he pushed back on the idea of negative interest rates as a tool to support the economy. Investors will now turn to a speech by BoE Governor Andrew Bailey to see whether he follows a similar bias when he speaks today at the Chief Executives Club at Queen’s. Another step away from negative rates combined with Brexit optimism could see that Pound look towards $1.30.
The US Dollar is trading mildly lower on Tuesday, as it continues to drift away from a 2 month high versus a basket of currencies. Investors looking cautiously ahead to the Trump – Biden debate live debate.
News of progress towards a US fiscal stimulus package was also weighing on demand for the US Dollar. House Speaker Nancy Pelosi said that the Democrats were unveiling a $2.2 trillion coronavirus relief bill. Attention will remain on Congress to see whether the two sides, Democrats and Republicans can agree on the deal.