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Pound Rallies Despite Housing Data and COVID-19, Tumbles on Brexit

June 5, 2020 at 18:37 by Simon Mugo

A column of 50 British pound notes

The Sterling pound today ignored the adverse reports coming out of the UK to rally to new 3-month highs against the US dollar boosted by the upbeat investor sentiment. The GBP/USD currency pair ignored the weak housing data and posted gains as investors bought riskier assets and sold safe-haven ones.

The GBP/USD currency pair today rallied from a low of 1.2582 in the Asian session to a high of 1.2731 in the early American session before retracing some of its gains by the time of writing.

The currency pair’s rally today was driven by the investor risk appetite, which lifted most risk asset. The pound was a primary beneficiary as investors piled into the currency even after the release of the downbeat UK house price index for May by Halifax. Today’s data showed that house prices fell for the third consecutive month, but by a lower margin than in April, which bodes well for the economy. Mounting criticism of Boris Johnson‘s handling of the coronavirus crisis did not seem to faze investors even after the PM’s approval rating fell.

The cable turned south after Michel Barnier, the top EU Brexit negotiator, revealed that the UK was backtracking on its earlier promises. The currency pair fell further after official data indicated that the UK’s death toll from the COVID-19 pandemic had reached 40,000, which is the highest in Europe.

The currency pair’s future performance is likely to be affected by geopolitical events over the weekend.

The GBP/USD currency pair was trading at 1.2670 as at 18:36 GMT having dropped from a high of 1.2731. The GBP/JPY currency pair was trading at 138.92, having risen from a low of 137.26.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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