The British currency seems to be subject to greater volatility, but without a specific direction in the medium term, due to ambiguous information on brexit and cooperation with the European Union. Today, however, the GBP/USD rate has reached its highest level in a week.
Views of divorce by mutual agreement
The pound seems to be gaining for the third day in a row and is heading for significant resistance at USD 1.13080. This follows the steps taken by European officials to resume talks on brexit. As the chief EU negotiator said, the agreement is within reach. On top of that, the U.S. dollar seems to be weakening on the broad market due to increased optimism of investors in the hope that even before the US presidential election an aid package for the American economy will be implemented. According to Bloomberg, this morning the GBP/USD exchange rate rose by as much as 0.9 percent to USD 1.3065 and against the euro, the pound rose by 0.5 percent to 90.83 pence.
Press reports indicate that talks on brexit will resume in London later this week and that the EU may give some reason for agreement. This is good news for the pound, Bloomberg's news agency reported. It is now assumed that the key period of negotiations will take place after the US elections and may be in mid-November. This may also be indicated by the growing expected volatility of the GBP/USD exchange rate in the currency options market.
Trump versus Republicans
In the United States, meanwhile, just two weeks before the presidential election, Donald Trump signaled his readiness to accept an aid package worth more than $2.2 trillion despite his own Republican Party's opposition.
This is the amount that the Democrats have been pressing for months. However, no precise timetable has yet been presented despite the ultimatums that Nancy Pelosi has set for talks.
Europe trembles before the next records
The U.S. dollar recently appears to be one of the weaker currencies and the exchange rate of the main currency pair EUR/USD has reached around 1.1860. This is the highest level since September 20. The successful bidding for European Union bonds could also help strengthen the euro, which shows that the financing of the needs of the bloc of countries is not at risk, which is good news.
However, the stock exchange indices in Europe do not show such optimism. The German DAX has fallen to its lowest level in a week with the worsening situation of the coronavirus epidemic in Europe. Germany, Greece, the Netherlands and Poland have recorded the highest number of infections in the last 24 hours, and in Spain, like in France, a curfew may be introduced.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
