News that the UK and EU leadership are moving nearer to a trade deal has helped to support the Sterling.
The British Sterling edged higher during London's trade on Wednesday, with a lift provided largely by rising hopes that a trade deal can be worked out with the E.U., and broad weakness in the US Dollar. The Pound had moved higher against the greenback before retreating; currency strategists blame the US President's latest tweet which indicated he would cancel discussions on a second stimulus package that would not resume until after the elections. That had a paradoxical effect; it triggered a Wall Street sell-off but boosted demand for safe-haven assets, including the Dollar. News that the UK and EU leadership are moving nearer to a trade deal has also helped to support the Sterling.
In London trading as of 11:25 am, the GBP/USD was trading at $1.2867, down 0.052%, and moving well away from the session peak of $1.29301. The EUR/GBP was higher at 0.9136 Pence, a gain of 0.292%; the pair has ranged from a low of 0.90946 Pence to a high of 0.91390 Pence in today's session. The GBP/JPY was higher at 136.42 Yen, a gain of 0.3198%.
Outlook Soft for Aussie and Kiwi Dollars
Analysts have said that the concerns over the US economy, now redoubled given the President's assertion that there will not soon be another stimulus package, will likely weigh on higher-risk assets. One strategist points out that asset-linked currencies such as the Aussie and Kiwi Dollars are likely to be “soft.” The Aussie Dollar could also be under additional pressure on rising expectations that the Reserve Bank of Australia could take on a more dovish posture at their next policy meeting, with lower interest rates and larger purchases of government debt. The AUD/USD was trading at $0.7122, up 0.3268%, while the NZD/USD was trading at $0.6586, a gain of 0.0729%.