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Pound Falls on Brexit Uncertainty, Weak UK PPI, and Strong Dollar

June 17, 2020 at 20:13 by Simon Mugo

A column of 20 Great Britain pound notes

The Sterling pound today fell against the US dollar as investors bought the safe-haven greenback in anticipation of further stimulus spending by the government. The GBP/USD currency pair got a brief respite from the optimism about a potential Brexit deal, but this was not enough to push the cable into positive territory.

The GBP/USD currency pair today fell from a high of 1.2588 in the early London session to a low of 1.2511 in the American session but was off these lows at the time of writing.

The currency pair fell earlier today amid concerns that the EU and UK would not reach a Brexit deal by Boris Johnson‘s hard deadline of December 31. The pair rallied briefly after the release of the most in-line UK consumer price index report for May. According to the Office for National Statistics, UK inflation remained stable at an annualised 0.5% in May. However, the country’s producer price index fell 10% on a year-on-year basis versus the expected 6% drop, which limited the pair’s gains. The pair also got some relief after Boris Johnson announced that the EU and UK had agreed to fast-track post-Brexit negotiations while France’s Emmanuel Macron is set to visit London.

The dollar’s resurgence as tracked by the US Dollar Index also contributed to the pair’s decline as investors bought the dollar on hopes that President Donald Trump‘s administration would announce a $1 trillion infrastructure bill.

The currency pair’s future performance is likely to be heavily impacted by the Bank of England’s rate decisions scheduled for tomorrow.

The GBP/USD currency pair was trading at 1.2549 as at 20:12 GMT having fallen from a high of 1.2588. The GBP/JPY currency pair was trading at 134.32 having dropped from a high of 135.12.

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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