The British pound is higher against the US dollar on Tuesday.
- Investors cover Sterling short positions according to CFTC data
- Major post-Brexit hurdles remain as EU/UK negotiations resume today
- Gold prices retake $2000 per oz as dollar trends lower
- China vaccine nearly ready, sets up priority country distribution
GBP/USD was up by 63 pips (+0.48%) to 1.2402 as of 4pm GMT. This week the pound-dollar exchange rate is higher by +0.56%.
The currency pair broke above a ceiling at 1.311 put in place yesterday and jumped above 1.315 to its highest in a week and a half.
GBP: CFTC data shows investors turning neutral on Sterling
The revelation from CFTC data that investors are backing off from short positions on the British pound is giving the British currency some extra momentum come Tuesday morning. A short postion is an investment that benefits from the value of the asset falling. For Sterling, the positioning has turned neutral from a negative net position that has been in place since April.
Brexit negotiations resume this week, and although the tone has improved in recent weeks, helping underpin the pound – some big sticking points remain. Specifically fishing rights, state aid and so-called ‘level playing field rules’. We will know by the end of this week whether any headway has been made on those issues when the chief negotiators give press conferences on Friday.
USD: China vaccine close to approval
More weakness in the US dollar saw major G10 currencies gain ground alongside the price of gold (priced in dollars) which rose back above $2000 per oz. One week ago on Tuesday gold prices crashed 5% in one day- the biggest 24-hour slide in 7 years.
The dollar is a favoured haven and source of liquidity during times of uncertainty. However, the S&P 500 – the index for America’s top 500 companies is close to a record high and investor sentiment is strong.
Part of the reason for the confidence is that a vaccine will limit future damage from the coronavirus pandemic. Today Chinese firm Sinovac said it will make hundreds of millions of doses of its coronavirus vaccine available to favoured countries including Brazil, the Philippines and Indonesia.
