Sterling reaches four week high against the Dollar

GBP

Sterling rose to a one month high against a broadly weaker Dollar, but failed to gain against the Euro as Brexit risks continue to weigh on the pound.

Britain and the European Union launched their fourth round of virtual post-Brexit trade talks in an attempt to make some progress towards securing a trade deal. As it stands, talks appear to be at an impasse with disagreements over fisheries and the level playing field.

Comments from Bank of England governor Andrew Bailey also weighed on the GBP as he advised banks to prepare for a no-deal possibility.

The reopening of some companies in the UK did provide optimism for the pound with lockdown restrictions easing which has slowed down the pace at which the UK economy was declining.

USD

The US Dollar fell to an eleven week low against a basket of currencies on Wednesday, as optimism grows that the worst of the economic downturn stemming from the global spread of the coronavirus is over.

The improving risk appetite has reduced demand for the safety of the greenback, which usually benefits from safe haven buying when markets are volatile and investors are reluctant to take risk.

Key announcements

12:45 – EUR – Main refinancing rate – Unchanged at 0%
12:45 – EUR – Monetary policy statement
1:30 – EUR – ECB press conference
1:30 – USD – Unemployment claims