Greenback Stands Tall vs. Euro and GBP

Greenback Stands Tall vs. Euro and GBP

On Wednesday, the U.S. dollar hit a two-month high vs. GBP amid concerns about the upcoming negotiations on United Kingdom’s exit from the European Union. The Greenback was also supported by expectations of a stronger than expected economic growth.

The pound fell as much as 0.5% vs. the Greenback and touched its lowest levels since October, before recovering to $1.2220. Britain is currently facing doubts regarding the negotiations for its exit from the EU. While, Prime Minister Theresa May had previously stated in October, that it will formally launch a process to leave the Union by the end of March.

The dollar continued rising against a basket of currencies, and the U.S. dollar index touched 103.25 at the end of yesterday’s trading session.

The dollar continues to receive support from expectations that the newly elected US President Trump's management will support the growth of the economy through taxes and public spending.

The EUR lost as much as 1% vs. USD and dropped to around $1.0370 as Germany's Finance Ministry expressed worries about Italian plans to rescue the country's third biggest bank, Monte dei Paschi di Siena, saying Rome must abide by EU rules.

Gold prices settled near a two-week high reached in the previous session, backed by a strong USD and rise in European stocks. The precious metal is trading around $1,140 and could trade in a limited range due to the lack of major economic data. On the other hand, the yellow metal could be affected by some political speeches before the year-end.

Also on Wednesday, oil prices rose for a fourth straight session and traded around the highest level reached in mid-2015, in anticipation that OPEC and non-OPEC members will stick to their promises to cut output in 2017. U.S. crude maintained its gains and settled at $54. Today, U.S. crude is awaiting the release of important data, the U.S. Gasoline inventories.

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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