Pound Rallies Higher on Risk-On Sentiment and Weak US Dollar

The British pound today rallied higher against the US dollar in a move that was largely fueled by the greenback’s decline following yesterday’s geopolitical events. The trade deal announced between the US and Mexico triggered a risk-on sentiment across the global financial markets, which triggered a significant selloff of the US dollar boosting the pound.
The GBP/USD currency pair today rallied from a low of 1.2860 in the Asian session to a high of 1.2920 in the early American session.
The trade deal signed by the USA and Mexico yesterday was the main trigger behind the greenback’s decline as tracked by the US Dollar Index, which hit a four-week low of 94.68 earlier today. President Donald Trump described the deal as being very good for the USA. The fact that UK traders resumed trading today following yesterday’s bank holiday also contributed to the pair’s rally. However, the pound’s rally was weighed down by the prospects of a no-deal Brexit, which according to Theresa May would not be the end of the world.
The currency pair extended its gains following the release of the US advance goods trade balance data by the Census Bureau in the early American session. The US recorded a trade deficit of $72.2 billion, which was higher than the expected $69 billion deficit. However, wholesale inventories came in above expectations.
The currency pair’s future performance is likely to be affected by the release of the US consumer confidence index later today.
The GBP/USD currency pair was trading at 1.2928 as at 13:11 GMT having rallied from a low of 1.2860. The GBP/JPY currency pair was trading at 143.58 having risen from a low of 143.04.

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