The pound hits a four week high against USD
The pound soared to a four week high against the dollar at the start of June as the global risk-on mood triggered weakness in safe haven currencies. Despite this, the pound still has many factors weighing it down, especially Brexit-related risks and speculation around negative interest rates.
The fourth round of talks with the European Union will begin today, with time ticking on the July deadline for an extension to be agreed. Despite safe haven flows turning around and the green shoots of a global recovery, the pound will be held back from really taking off unless we see positivism and progress from those talks.
The greenback suffered on Monday as global risk sentiment improved and safe haven risk flows reversed. This was in large caused by the positive US manufacturing data, which eased off an eleven year low. Investors took this as a sign that the worst of the economic downtown could be behind us.
This comes after Chinese PMI’s showed an improvement in factory activity and European manufacturing PMI’s picked up from record lows. However, the risks of a Sino-US trade war will continue to worry investors and will remain a headwind for risk appetite in the short term.
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