Pound hurdles profit-taking gap
Sterling managed positive traction on the Dollar yesterday, capitalising on broad-based US Dollar weakness and recovering part of the previous day’s heavy losses. Global risk sentiment got another boost after the US House of Representatives approved the increase of stimulus payments from $600 to $2,000. The market positivity, however, undermined the Dollar’s safe-haven status and was seen as a key factor that provided a modest lift to cable buying.
EU member states formally approved the post-Brexit trade deal yesterday and the market seemed unaffected by concerns about the exclusion of the crucial services sector, and even a sharp rise in new cases infected by a mutant coronavirus in the UK.
Sustained USD selling bias allowed USD to gain traction for the second consecutive session and move back above mid-1.3500s as bulls look to seize control but the cable remains at the mercy of USD price dynamics. What’s more, thin liquidity conditions warrant some caution before placing directional bets.
US Congress members struggle to roll out $2,000 paychecks after Senate Majority Republican Leader Mitch McConnell showed readiness to block the payments earlier in the day. Though, the policymaker afterward put forward the bill, as a part of the procedure, while also adding about social media companies’ protections and election fraud studies afterward.
Against this backdrop, the US dollar index (DXY) drops to a fresh low since April 2018 while stock futures in the US and the UK remain positive.
The Euro remains on the front foot after piercing through multi-month highs ahead of Wednesday’s trading session.
Having successfully crossed its highest level since April 2018, Euro bulls are up for challenging the 32-month peak around the 1.24/1.25 mark. In the short term, the key psychological area of 1.2300 may offer an intermediate halt during the surge as we head to the year’s end.
As of writing, the Euro currently trades around the 1.2255 mark against its US counterpart.