June 25, 2020 - Written by John Cameron
STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Edges Higher on Hopes for Brexit Compromise with the EU
Pound (GBP) Buoyed by Brexit Optimism
The Pound (GBP) is making tentative gains against the US Dollar (USD) and the majority of its other peers this morning amidst reports the EU is ready to compromise with the UK on a key issue.
The Financial Times reports that Brussels has signalled its willingness to compromise on its demand for the UK to maintain a ‘level playing field’ with the EU after Brexit.
Michel Barnier, the EU’s chief Brexit negotiator has indicated his team is open to working with the UK on a ‘credible and operational’ plan to ensure close alignment between the UK and EU on state-aid, environmental and employment regulations. But not at the expense of the rules governing the single market.
Speaking in a webcast organised by the European Policy Centre think-tank, Barnier said:
‘We are ready on this point, as well as on the fishing issue, governance, and some other issues where we are divergent, we are ready to work on landing zones respecting the mandate of the EU.
‘We are ready to work on operational and clever compromise but not at the price, never at the price, of any unravelling of the single market. Never.’
The news will bolster hopes that a deal may be feasible, although it may be too early to share in Boris Johnson’s optimism that a trade agreement could be reached by the end of July.
US Dollar (USD) Supported by Coronavirus Jitters
At the same time, the US Dollar (USD) remains well supported this morning amidst growing concerns of a second wave of coronavirus infections.
Markets are particularly worried about a startling rise of new cases in the US, with certain areas of the country recording huge spikes in recent days.
Jim Reid, as Strategist at Deutsche Bank comments:
‘A plethora of bad news about the virus led to a major sell-off in risk assets yesterday as volatility returned to financial markets once again.
‘It wasn’t a single bad headline that led to the plunge, but a drip-feed of negative stories that all combined to show increasing signs of a deteriorating situation on the virus, most obviously in the US.’
Further lifting demand for the safe-haven US Dollar is the threat of a transatlantic trade war as tensions between the US and EU flare, following news that the White House has outlined plans to impose tariffs on $3.1bn of European products.
GBP/USD Exchange Rate Forecast: US Durable Goods Figures to Bolster the US Dollar?
Still to come today is the publication of the latest US durable goods release later this afternoon.
Today’s data is likely to lend some support to the US Dollar as economists' forecasts goods orders will have seen a solid rebound last month, helping to reverse the 5-year slump recorded in April.
The focus for GBP investors, meanwhile, will remain on Brexit for the foreseeable future as ‘intensified’ talks are set to begin next week. Will any hints of progress help to buoy the Pound?
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TAGS: Dollar Pound Forecasts