Pound Gains, Dollar Loses To Hopes Of An Extended Brexit
The Asian markets on Wednesday showed signs of a revived confidence in the pound with renewed demand pushing it up the dollar index at the expense of a weakening U.S Dollar. The renewed demand for the pound was in reaction to the news about Theresa May’s interest in extending Brexit breakout deadline. The U.K Premier had earlier in the week hinted about negotiations with the European Union aimed at seeking an extension to the Brexit deadline.
The sterling reacted to this by gaining 0.2% on the GBP/USD currency pair trade today.
Extended Brexit deadline
The news about an extended Brexit deadline date breaks tensions that have been building up against the Sterling. Investors had shied away from the currency amidst fears that of U.K leaving the Union without a deal. Its performance deteriorated for the past few weeks and escalated last Friday when it sank to three-month when the U.K parliament rejected May’s proposed Brexit strategy.
May, however, stressed that the extension would only be as “short as possible” and only aimed at helping her government comes up with a new proposal. Speculators believe that while the U.K government wants an extension, it doesn’t want to be roped into the upcoming European Union elections slated for May 22.
In a bid to further break up the parliamentary gridlock facing her proposed Brexit strategy, May has also expressed her interest in meeting Jeremy Corbin, the opposition leader and chief anti-Brexit campaigner.
A weakened U.S Dollar
The greenback slipped by 0.2% on the Dollar Index to close the day at 96.768.
The fall was occasioned by the reports of a slowed uptake of durable goods by the world’s largest economy. The forex market acted in fear as they considered this to be an indication of an extended slowed economic growth in the United States.
This is the first time the consumption of durable goods slowed down in three months.
Earlier Tuesday, the Australian Bureau of Statistics reported that retail sales in the country had improved by 0.89% on the month-on-month consumption scales. According to the bureau, this was the fastest rise recorded since November 2017.
In effect, Aussie edged up against today’s Dollar rate closed the day 0.4% higher on the AUD/USD pair.
Greenback’s woes continued in China as the USD/CNY pair slid 0.2%. Yuan is still reaping from the end of March Purchasing Manager’s Index (PMI) reports that gave hints of a revived Chinese manufacturing industry. The Caixin/Markit index showed that the country’s PMI had hit an all-time high of 54.4 points, rebounding from the four-month low of 51.1 points recorded in February 2019.
It was however not all gloom for the U.S dollar as it gained against the Japanese Yen. The slight rebound from a series of loses was occasioned by hints that the Trump Administration was now closer to reaching a trade deal with China.
