Pound Climbs to 5-Month High Against Dollar and Euro

Pound Climbs to 5-Month High Against Dollar and Euro

166
0
SHARE

The pound continued its rise on Thursday after the announcement of a new Brexit agreement between Boris Johnson and the European Union. The pound has now gained more than 5% for a week, driven by hopes for an orderly exit from the UK’s EU on October 31st.

The British currency climbed Thursday to $1.2990 (+1.2%), before ending the session more modestly around $1.2891 (+0.58%) pending an adoption of the agreement by the British parliament, which is not won in advance. At this level, the British currency has returned to its highest level in five months against the dollar.

In interbank trading in New York, the dollar lost ground on Thursday for the second consecutive session. The dollar index, which measures its evolution against 6 reference currencies, fell by 0.40% to 97.61 points, bringing its decline to 1.1% in 5 sessions.

The euro, however, rose 0.5% Thursday to $1.1126 after the announcement of an agreement on Brexit, which potentially reduces the risks currently weighing on the European economy.

The greenback was notably put under pressure by the announcement of a stronger-than-expected decline in industrial production (-0.4% compared to August) and retail sales (-0.3% over one month) in the United States in September. These signs of weakness increase the chances of further Fed rate cuts and make dollar investments less attractive.

On Wednesday, the Fed found in its Beige Book that growth had slowed since the summer at a “light to modest” pace in recent weeks in the United States. This finding is slightly down on the previous Beige Book published on 4 September, which described an economy advancing at a “modest pace”. Economic players do not expect a recession, but they lowered their expectations for growth in the next 6 to 12 months, the Fed said.

Retail sales fell for the first time in seven months in the United States, raising fears that the weakness seen since August in the manufacturing sector is being passed on to consumption, which accounts for more than two-thirds of GDP in the United States.

SHARE
Previous articleNew stats support the thesis of the economic slowdown
Next articleNetflix stemmed the bleeding
Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.

NO COMMENTS

LEAVE A REPLY