Pound Rallies on Brexit Optimism, Later Falls on FOMC Decision

The British pound today rallied higher against the US dollar amid optimism that the UK would not crash out of the EU after Boris Johnson toned down his rhetoric. The GBP/USD currency pair’s rally was also driven by the dollar’s selloff coupled with the upbeat UK inflation data released earlier today, which boosted the pound.

The GBP/USD currency pair today rallied from a low of 1.2875 in the Asian market to a high of 1.3007 during the American session and was trading near these highs at the time of writing.

The currency pair’s initial was driven by favourable market sentiment after the British PM reassured leaders of his commitment to getting a post-Brexit trade deal with the EU. The release of the upbeat British consumer price index report for August also drove the pair higher. According to the UK’s Office for National Statistics, the country’s headline inflation rose 0.2% versus the expected 0% print, while the core print also beat analysts expectations. The disappointing retail price index, combined with the producer price index, could not derail the pair’s ascent.

The pair later fell in the afternoon as Boris Johnson said that he does not believe the EU is negotiating with good faith. The pair fell as MPs quizzed the Prime Minister about the rising coronavirus cases in the UK. The US FOMC rate decision also contributed to the pair’s decline.

The currency pair’s future performance is likely to be affected by tomorrow’s Bank of England monetary policy decision.

The GBP/USD currency pair was trading at 1.2947 as at 19:32 GMT, having risen from a low of 1.2875. The GBP/JPY currency pair was trading at 135.96, having fallen from a high of 136.47.

© SimonMugo for Forex News, 2020. |
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Post tags: Boris Johnson, Brexit, Consumer Price Index, FOMC, GBP/JPY, GBP/USD, Interest Rates, Office for National Statistics, Pound, PPI, United Kingdom

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