Brexit deal triggers a spike in GBP as US dollar struggles in the face of mounting pressure
Published on: 10/18/19 2:46 PM
The third week of October 2019 witnessed some unexpected changes that affected the FX market. The long-awaited deal between Britain and the EU has triggered a gain in the sterling pound. Meanwhile, the ongoing China-US trade wars and a decrease in retails sales in the country have brought mixed results for the dollar. Forex Broker comparison service FXBrokerFeed highlights the week that was featuring the shocking Brexit deal and the unshakable US dollar.
It’s a Brexit deal!
The Brexit deal is arguably the biggest news of the week. After a long and tedious process of waiting, a deal has finally been reached. With the announcement of the deal, the GBP experienced a significant spike that made it outperform other currencies. In fact, the GBP/USD
reached 1:2990 which is the highest it has reached since May 13. However, the UK parliament is expected to vote on the deal on Saturday, October 19th.
Amid the rising fears of the deal not getting voted through hence the volatility of the sterling, the market indicators depict a different scenario. According to the ATR indicator, the current GBP standing is its highest in the last seven months. On the other hand, the CCI indicators depicts intensified buying of the GBP/USD
U.S dollar continues to defy odds
The U.S economy has come under a lot of fire in recent times. One of the biggest threats to the U.S dollar is the China-U. S trade wars. In addition, the declining retail sales in the U.S pose a huge threat to the dollar. However, the green buck has continued gaining even with the tough economic pressure. The collapse of the anticipated truce on the trade wars has not deterred the dollar from gaining. This can be attributed to the short-term strategy adopted by currency investors informed by the dwindling hopes of a truce.
Weak retail sales across the U.S had a ripple effect on the dollar which allowed the Euro to gain against the dollar. The Beige book from the Federal Reserve showed a modest to moderate growth of the U.S economy. This development allowed the EUR/USD
to draw closer to 1:11.
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