GBP/USD has reached its highest level since the beginning of September. At the time, the pair was close to the number 1.31. Hopes for progress on Brexit and US stimulus are boosting the currency. The concerns about a lockout in the UK that "broke the circuit" weighed on sterling.
The GBP/USD pair had a good two-way price movement on Tuesday. This movement is influenced by different combinations of forces. The expectation that U.S. lawmakers will agree on additional fiscal stimulus keeps the market optimistic.
However, this in turn undermines the relative safe-haven status of the US dollar and helps the couple to gain traction. Unfortunately, the increase did not get a follow-up. Instead, it quickly ran out of steam amid ongoing Brexit-related uncertainty.
European Commission to Make Talks More Intensive
The European Commission has formally stated that it is willing to intensify trade talks with the UK. Separately, the British PM's spokesman confirmed that a re-start of talks could take place if the EU fundamentally changes its approach.
The EU must also make it clear that they have done so. Keep in mind that trade talks between the UK and the EU have stalled amid disagreements over fishing access and competition issues. It is so hard to get the deal in those aspects.
This comes at a time when the UK is imposing new lockout measures to suppress the second wave of coronavirus infections. It is known that this second wave had an impact on the British pound currency. Therefore, appropriate steps should be taken immediately.
GBP/USD Pair Data
The pair retreated about 70 pips from the daily swing high. This was despite finding some support ahead of the 1.2900 figure amid optimism about a US stimulus package before the election. Many people are still confident that funding will be provided before November 3.
Market expectations were further boosted by US President Donald Trump's comments. He said he was willing to accept a bigger aid bill despite opposition from his own Republicans. This triggered a sell-off in U.S. bonds and has an impact on the market.
In addition, the decision from Trump also pushed the yield on benchmark 10-year bonds soaring to a four-month high. Of course, it puts heavy pressure on the dollar and helps couples to get some positive appeal. Things could still change in the market.
Meanwhile, the price of gold also rose again. The increase came for the second time in a row on Tuesday. This is due to speculation that the White House and Congress will reach an agreement for a new coronavirus stimulus. More precisely is before the November 3 US elections.
Pessimism from Some Parties
But Chuck Schumer, a prominent Democratic member said he doesn't expect either party to approve anything before the election in two weeks. According to him, this could reverse the positive sentiment seen this week in gold, which has strengthened and in a good position.
Gold alone can strengthen at the expense of the dollar. Nothing is going to happen with this government. Schumer said at a press conference held to discuss the progress of covid-19 stimulus. They'll try to get a relief deal during the lame-duck session.
The situation also refers to the period between the election and the presidential inauguration next January. It is expected that later Democrats will be won by their candidate Joe Biden. Previously, several polls have also shown similar points where Biden is superior.
House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin was having a phone conversation at the time of writing. Still, Schumer said he doesn't expect that either. Reportedly, Pelosi did not negotiate in good faith so the deal remains difficult.
