The pound is expected to rise before the US election, but the outlook still depends on the Brexit negotiations
Original title: The pound is expected to rise before the U.S. election, but the prospects still depend on Brexit negotiations
the pound to dollar exchange rate in the U.S. election The former is expected to appreciate, but whether it can maintain its momentum after the election is still questionable.
The pound remained neutral on Tuesday. Analysts believe that even if the UK and the EU reach a trade agreement, the trend of the pound will not change much.
“We are increasingly convinced that the sterling’s boost from the Brexit trade agreement may be small,” said Derek Halpenny, research director at MUFG.
“Yesterday was a good example, showing that some good news did not help the pound sterling much at all,” Halpenny said.
However, the option risk reversal shows that traders are no longer short on the pound in a week, paving the way for the pound to rise before the US election on November 3. Behind this change in position and sentiment indicators are the latest developments in the Brexit negotiations and the market’s tendency to sell dollars on the eve of the election.
However, whether the pound can successfully hit a new high or maintain its upward trend thereafter depends largely on the outcome of the negotiations between the UK and the EU. Given the uncertainty surrounding the epidemic, the overall risk appetite of the market will also be key.
The EU’s chief representative for Brexit negotiations, Barnier, will stay in London until Wednesday, after which the talks will be transferred to Brussels.
During the European session on Tuesday, the pound exchange rate against the U.S. dollar was flat at 1.3021 U.S. dollars. Technically, in the short to medium term, the pound is still in an upward trend channel.
Except for the Brexit factor, negative interest rates have not been excluded. This is another shock that the pound cannot bear.
For the British pound, whether the Bank of England will cut interest rates to negative interest rates is second only to the outcome of the trade negotiations between the United Kingdom and the European Union.
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