The British Pound enjoyed a strong day of trading on Thursday, buoyed by a weakened US Dollar, vaccine hopes and growing optimism over a Brexit deal.
Rumours of a Brexit deal happening soon provided a boost to the British Pound which is 1.02% higher against the US dollar, with Cable trading at 1.3500. Today’s figure is the highest since December 2019.
Trade negotiations between the UK and the EU have gathered momentum recently, raising hopes of a Brexit deal. Should a deal be reached, which if rumours are true should be reached soon, it would provide a further boost to the British Pound which has felt the uncertainty of a No-deal Brexit weigh heavily opon it.
Speculation of a Brexit deal was ramped up after Ireland’s Foreign Minister, Simon Coveney was reported as saying that there was a good chance that the UK and the EU would agree to a trade deal within the next few days.
Furthermore, the British Education Secretary Gavin Williamson said that both the United Kingdom and the European Union are making good progress in the Brexit trade deal talks.
US Dollar Weakness
The British Pound and other major currencies all received a welcome boost by the underlying weakness in the US Dollar. The USD suffered heavy declines in Thursday’s trading as optimism grew over U.S. stimulus talks. Meanwhile, growing hopes of a successful roll-out of vaccines are fueling a global risk-on that sees interest in riskier currencies at the expense of the safe-haven US dollar, especially at a time when the Federal Reserve is committed to keeping interest rates low for the upcoming years.
At the time of writing, the USD is down 0.22% against the EUR, down 0.54% against the JPY, down 0.33% against the CAD and down 0.34% against the AUD. The US Dollar index is down 0.50%.
