Pound Rallies to 3-Year Highs Against Dollar on Brexit Deal Optimism

The Sterling pound today rallied to 3-year highs against the US dollar boosted by investor optimism about a potential Brexit deal boosted by Simon Coveney’s comments. The weak dollar also fueled the GBP/USD currency pair’s rally following yesterday’s US ADP employment change report, which missed analysts expectations.
The GBP/USD currency pair today rallied from a low of 1.3353 in the Australian market to a high of 1.3454 in the early American session and was headed higher at the time of writing.
The positive investor mood drove the pound’s initial rally after UK regulators approved Pfizer’s COVID-19 vaccine, which will be available in the country starting next week. Comment’s by Irish Foreign Minister Simon Coveney that he believes the EU and UK could agree on a Brexit deal in the next few days drove the pair higher. Investors chose to ignore yesterday’s comments by Michel Barnier the top EU negotiator claiming that ‘a deal hangs in the balance’, which fueled the pair’s pullback yesterday. The release of the upbeat Markit/CIPS UK services PMI, which came in at 47.6 versus analysts estimates of 45.8 also boosted the pair. 
The US Congress’s willingness to discuss a much large fiscal stimulus package also fueled the cable’s rally. The pair had a muted reaction to the release of the US initial jobless claims data but is due for a pullback after today’s rally.
The currency pair’s performance is likely to be affected by the US ISM services PMI due for release later today.
The GBP/USD currency pair was trading at 1.3465 as at 13:42 GMT having rallied from a low of 1.3353. The GBP/JPY currency pair was trading at 140.11, having risen from a low of 139.53.
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