The British pound today rallied higher against the US dollar extending yesterday’s positive momentum boosted by Boris Johnson‘s promises of more spending to boost the UK economy. The weak dollar also raised the GBP/USD currency pair as investors reacted to news that a potential coronavirus vaccine had shown positive results in early clinical trials.
The GBP/USD currency pair today rallied from a low of 1.2360 in the Asian market to a high of 1.2490 during the American session and was near these highs at the time of writing.
The currency pair’s initial rally was driven by Johnson’s promise to spend more money rebuilding the British economy instead of embracing austerity measures, and investors celebrated the move. The pound was barely affected by the downbeat Nationwide UK housing prices index for June released before the London open, which came in at -1.4% missing expectations set at -0.7%. The inline Markit/CIPS UK manufacturing PMI that was recorded at 50.1 boosted the pair briefly. The pair was weighed down by Jonathan Haskel‘s non-committal response to questions about whether the Bank of England was considering negative rates.
The cable extended its gains in the American session after the dollar sold off despite positive US ISM Manufacturing PMI given the risk-on market sentiment. The greenback’s selloff caused the US Dollar Index to hit a low of 97.03 today boosting the cable.
The currency pair’s future performance is likely to be affected by geopolitical events given tomorrow’s empty UK dockets.
The GBP/USD currency pair was trading at 1.2482 as at 19:30 GMT having rallied from a low of 1.2360. The GBP/JPY currency pair was trading at 134.15, having risen from a low of 132.95.
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