Sterling reaches four month highs against dollar
Sterling rose to four month highs against a weak US Dollar on Tuesday but gains were capped against the Euro due to ongoing Brexit uncertainty. The European Union says a deal needs to be done by October to allow time for ratification by the end of the year. Both sides have said the talks have been stalling with a lack of progress made so far. Michel Barnier, the EU’s chief Brexit negotiator, said a trade deal with the UK was possible but the UK need to compromise.
Concerns about the lack of progress of Brexit negotiations also prevented the pound from pushing above the $1.30 level against the dollar. Uncertainty was also reflected in currency derivative markets.
Sterling’s recent strength can be attributed to the number of coronavirus cases decreasing along with the stimulus provided by the central bank and government to keep the economy afloat and to prevent a massive wave of unemployment.
The dollar made a slight recovery on Tuesday moving away from two year lows, but further weakness is set to continue as the number of coronavirus continues to rise.
The federal reserve is set to maintain a very loose monetary policy in a bid to help boost the US economy. The FED’s ultra loose policy is weighing on the dollar and causing it to fall lower against major currencies.
The US Dollar was also impacted by poor data which showed consumer confidence fell more than expected in July. Attention turns to what the US central bank will implement in their stimulus package after their two day meeting has been concluded.
19:00 – USD – Federal Reserve Interest rate decision – expected to keep rates unchanged at 0.25%
19:00 – USD – Federal Reserve Monetary Statement
19:30 – USD – FOMC Press Conference
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