Pound US dollar exchange rate: GBP/USD soars by 1.9 percent on UK-EU Brexit breakthrough
Oct. 11, 2019
The pound US dollar exchange rate soared by over 1.9 percent today, with the pairing currently trading around $1.264 after the EU’s Chief Brexit Negotiator, Michael Barnier described a “constructive meeting” with the UK Brexit Secretary Steve Barclay. Today also saw the EU27 give the greenlight on “tunnel” negotiations ahead of the EU summit next week.
The Pound surged against many of its competitors today on renewed hopes of a possible Brexit deal ahead of the October 31 deadline. Donald Tusk, the President of the European Council, was optimistically cautious: “Of course, there is no guarantee of success and the time is practically up, but even the slightest chance must be used. A no-deal Brexit will never be the choice of the EU.” UK-EU talks are set to intensify over the coming days, with a formal announcement expected from Downing Street later on today. If positive news emerges we could see Sterling hold onto its gains into the weekend as no-deal fears are effectively shelved.
Meanwhile, the US dollar plummeted against the pound as improving US-China trade relations saw traders abandoning the “greenback” safe-haven for on-risk assets.
China’s Vice Premier Liu He said: “The Chinese side came with great sincerity, willing to cooperate with the US on the trade balance, market access and investor protection.”
US President Donald Trump was also optimistic, tweeting: “Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting the Vice Premier today. All would like to see something significant happen!”
In US economic news, today saw the release of October’s preliminary Michigan consumer sentiment index, which rose unexpectedly from 93.2 to 96. However, this failed to buoy the US dollar, with market attention firmly fixed on US-China trade developments.
Brexit will drive the GBP/USD exchange rate into next week, with negotiations between the UK and EU set to continue over the weekend. However, if the newly proposed deal shows signs of falling through, or the Conservative Government fail to secure a parliamentary majority, we could see Sterling start to shed today’s gains.
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