GBP/USD rates have moved back through the key resistance barrier of 1.30 this week, with the Pound hitting a high of 1.3138 this morning.
The Pound has made gains in line with its improvement against the other majors and is now trading close to a three month high.
|Currency Pair||% Change in 1 month||Difference on £200,000|
It seems that the market's expectation that UK PM Theresa May will receive an extension to Article 50, thus removing the risk of the no-deal Brexit scenario come March 29th, has lent support to the Pound. It is becoming clear that the markets are being driven by the fear of no-deal, rather than the fear of a bad deal.
This of course, would change over time as any prospective deal is dissected, but for now any level of certainty would help solidify Sterling's position against the greenback in my opinion, with 1.30 likely to become a bottom line, rather than the immovable resistance barrier it has been in recent months.
Whilst the Pound has seen its value rise in recent days due to an increase in investors' risk appetite for GBP, it has also benefitted from a sell-off of USD positions. It has been widely suggested that the US economy is now growing at the slowest pace since President Trump came to office, and whilst the most controversial President in the last generation has been quick to distance himself from the downturn, there is no hiding from the fact that the economy is not performing to the same levels it was during the first two quarters of 2018.
The on-going Government shut-down, the longest on record, is entering its 34th day and continues to have a negative impact on investors' risk appetite for the USD. It has been mooted that it is costing the US economy 0.1% of its GDP each week and whilst this figure has not been confirmed, it would seem that the suggestion has been enough to push the greenback back below the key resistance level of 1.30.
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