1 month ago
Forex

Forex: Sterling Hits New Highs on Brexit Optimism

Investing.com - The pound hit a two-year high against the euro Friday and a three-month high against the dollar on

Investing.com - The pound hit a two-year high against the euro Friday and a three-month high against the dollar on growing confidence that the U.K. can avoid crashing out of the European Union.

The U.K. newspaper The Sun reported that Ireland’s Democratic Unionist Party is prepared to conditionally back Prime Minister Theresa May’s Brexit Plan B next week.

“If this report is true, I expect sterling to rally to 1.32 versus the dollar. A technical breakout to 1.38 is also a possibility,” Michael McCarthy, chief markets strategist at CMC Markets, said in a Reuters report.

The deal faces a debate and vote in Parliament on January 29. For May’s deal to be approved, she will need to convince far more than the handful of DUP lawmakers. Her plan was rejected by 432 votes to 202 in the House of Commons earlier this month.

The GBP/USD pair rose as high as $1.3134 in Asia but retreated to $1.3077 by Friday by 04:07 AM ET (09:07 GMT). The pound also rose as high as 1.1598 against the euro, its highest since May 2017, after European Central Bank board member Benoit Coeure hinted the bank may not raise interest rates at all this year.

Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.1% to 96.140 as traders digested the latest news on U.S.-China trade disputes.

In an interview on CNBC on Thursday, U.S. Secretary of Commerce Wilbur Ross said while he acknowledged there is a “fair chance” of a trade deal, and that he thinks both China and the U.S. are eager to end their trade war, he is concerned that the two nations remain far apart on trade.

“Trade is very complicated. There are lots and lots of issues,” he said.

Ross added that the two sides have been making progress on “easier” issues like how much of certain American products the Chinese will agree to buy, such as soybeans and liquefied natural gas.

On the other hand, contradicting Ross’s comments, White House Economic Adviser Lawrence Kudlow later said President Donald Trump is optimistic about trade talks, adding that he expected the January jobs report would be up a significant amount.

Elsewhere, the Australian dollar was little changed after it traded lower on Thursday after one of the Australian top four big national banks, the National Australia Bank (AX:NAB), raised the home loan rates.