Forex Time: Pound Gains as May Considers Brexit Delay
On Tuesday, the GBP/USD pair gained to a four-week high in Asia. The gain came after the Bloomberg report that said Teressa May was considering delaying a deadline on Brexit. The report said May is expected to allow the cabinet to discuss extended the deadline beyond March 29 at a meeting on Tuesday.
The GBP strengthened following the news because it gives May more time to prepare a strategy to stop the U.K leaving the E.U with no deal next month.
The GBP/USD pair traded at 1.3138 by 11:27 PM ET (04:27 GMT), up .03%. The pair rose to a four-week peak of $1.3153 earlier in the day, its four-week peak.
According to Trump, the two sides “are going to have a signing summit” and that they are “getting very very close,” Although he cautioned, it’s possible that the deal might not be successful.
The U.S. dollar index that tracks the greenback against a basket of other currencies slipped 0.1% to 96.225. Janet Yellen-the former Fed Reserve Chairman made headlines when she said Trump does not understand the Central Bank.
“I doubt that he would even be able to say that the Fed’s goals are maximum employment and price stability, which is the goals that Congress have assigned to the Fed,” she said in an interview with American Public Media’s “Marketplace” program, published on Monday.
“He’s made comments about the Fed having an exchange rate objective to support his trade plans, or possibly targeting the U.S. balance of trade,” she said. “Comments like that show a lack of understanding of the impact of the Fed on the economy, and appropriate policy goals.”
Looking ahead, traders will focus on a set of data due in the second half of the week for more hints on the health of the global economy. This includes manufacturing activity figures from China and the U.S and 4th quarter gross domestic product figures.
Forex Time: Yuan tops seven-month high, Aussie gains on China tariff delay
On Monday, the Yuan touched a seven- month high and the commodity-linked Australian and New Zealand dollars gained. The gains came after Trump confirmed he would delay a planned increase in tariffs on Chinese imports.
On Sunday, Trump said he would push back a March 1 deadline after U.S-China trade talks made significant progress.
Chinese equities surged as European shares and investors also opened higher.
The offshore Yuan rose to 6.6737 per dollar and was up 0.3% at the 6.68 by 1020 GMT.
“There was a huge risk premium in the renminbi that is being priced out,” said Esther Reichelt, Frankfurt-based FX strategist at Commerzbank. News of the postponement did not surprise much because the markets had already been factoring in reduced China-U.S trade tensions.
The AUD, seen as a proxy for China risk because of Australia’s dependence on Chinese demand for its exports, rose 0.5% to $0.7168. The New Zealand dollar gained 0.7% to $0.6889.
The euro gained against a weaker dollar, adding 0.2% to $1.1354 to keeping it within recent trade ranges.
The dollar index, which measures it against a basket of other currencies, fell 0.1% to 96.390 as investors sold and bought currencies considered riskier.
With the weaker dollar and optimism improving, emerging- market currencies also rose, with the rand strengthening 1%.
Sterling rose 0.3% towards $1.31 as traders considered whether the British government might delay Brexit should May fail to secure support for her withdrawal agreement.
May has put off her Brexit deal vote until late March 12 – 17 days before Britain’s official departure date from the European Union – exacerbating fears of a no-deal Brexit.
The Japanese yen remained unchanged against the dollar at 110.64 yen per dollar.
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