The British pound today rallied higher against the US dollar from the early European session as it emerged that the European Union and the UK were about to reach a Brexit deal. The GBP/USD currency pair was further boosted by the fact that the US warned China against devaluing its currency, which did not favor the greenback.
The GBP/USD currency pair today fell to a low of 1.3134 before rallying to a high of 1.3210 following the Brexit and trade war headlines.
The currency pair was initially weighed down by the release of several disappointing macro reports by the UK’s Office for National Statistics earlier today. The ONS released the UK’s trade data for August, which recorded a bigger deficit than expected. The industrial production data beat expectations by coming in at 0.2% versus the expected 0.1%. The manufacturing production data and the construction output prints both came in lower than expected. UK GDP growth estimates remained flat in August as compared to the expected 0.1% growth, which also dragged the pair lower.
The pair reversed its downtrend after the EU’s chief negotiator Michel Barnier confirmed that 85% of the Brexit deal was already finalized. US Treasury Secretary Steven Mnuchin‘s warning to China also boosted the cable. A hawkish speech by the Bank of England‘s Andy Haldane also boosted the pair.
The currency pair’s future performance is likely to be affected by Brexit headlines and macro data from both the UK and the USA.
The GBP/USD currency pair was trading at 1.3205 as at 16:08 GMT having rallied from a low of 1.3134. The GBP/JPY currency pair was trading at 148.83 having dropped from a high of 149.30.
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