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Pound Hits 5-Week High Versus US Dollar, as Brexit Transition Agreed

Market CommentaryPound Hits 5-Week High Versus US Dollar, as Brexit Transition Agreed
The pound to US dollar interbank exchange rate has hit its highest since February 15th today, at 1.4078, as the UK and EU announced yesterday that they
The pound to US dollar interbank exchange rate has hit its highest since February 15th today, at 1.4078, as the UK and EU announced yesterday that they’ve agreed a Brexit transition deal. Image credit: Nathaniel Dodson.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to US dollar interbank exchange rate.

This tells you when it’s a favourable time to exchange pounds to US dollars, for your money transfer!

Sterling flies higher versus the greenback! The pound to US dollar interbank exchange rate has hit its highest in 5 weeks today, or since February 15th, at 1.4078.

The pound has jumped against the US dollar, because yesterday it was announced that the UK and European Union have agreed a “large part” of the Brexit transition deal.

Sterling has risen, because on Monday the UK’s Brexit secretary David Davis and the EU’s chief negotiator Michel Barnier said that they’d taken a “decisive step” to a Brexit transition agreement.

In particular, the UK’s Brexit transition phase will last from the 29th March 2019 to the 31st December 2020, said Mr. Davis and Mr. Barnier yesterday, thus boosting the pound.

This has lifted the pound, as the Brexit transition agreement “should give us confidence that a good deal for the UK and EU is closer than ever before,” added Mr. Davis.

This has also raised sterling, as the transition deal “is sufficient for most [UK] businesses to plan ahead”, according to the British Chamber of Commerce’s director general Adam Marshall!

US dollar weakens, on Trump unpredictability

Moreover, the pound to US dollar interbank exchange rate has also hit this 5-week high, because financial markets are nervous about US President Donald Trump’s continued unpredictability.

The US dollar has lost out, to start with because in recent weeks Mr. Trump has announced steel and aluminium tariffs on some of America’s key allies, including the UK, EU and Japan.

The buck has also fallen, because Mr. Trump looks set on destabilising relations with some of America’s core trade partners, such as abandoning the NAFTA trade deal with Canada and Mexico.

The greenback has weakened too, as Mr. Trump has recently abruptly sacked key staff in the US government, including America’s chief diplomat, Secretary of State Rex Tillerson.

In addition, the US dollar has also sunk, because Mr. Trump recently passed tax cuts and spending commitments that will greatly lift America’s fiscal deficit in the coming years.

With all this in mind, the pound has reached this 5-week high against the US dollar, and may rise further!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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