Pound Holds Gains on Brexit Deal Hopes

Pound Holds Gains on Brexit Deal Hopes


The British pound gained ground against rivals amid rising hopes of reaching a deal between the United Kingdom and the European Union. The EU and the UK agreed to intensify talks, including weekends, to seal a deal. Michel Barnier signaled that the EU is going to make the necessary compromise to deliver a deal. Both parts need to strike a deal, which would help them to avoid unwanted economic losses, especially as risks of a second coronavirus wave loom. The GBPUSD soared to a six-week high of $1.3176, and the EURGBP dipped to 0.9011.


The dollar index, which measures the greenback against a basket of major currencies, added to previous losses falling to 92.47, the lowest since the beginning of September, as investors await developments over stimulus package talks. Trump and Pelosi bolstered the chances of reaching a deal before elections, which weighed on the buck. However, last night, President Trump accused Democrats of not doing the needed to strike a deal, raising uncertainty again. On the other hand, the European currencies inched higher on growing prospects of a Brexit deal, pushing the dollar index lower.


Major US stocks index futures drifted lower as investors lose hope of setting a deal over the covid19 relief package before elections. President Trump accused Democrats of unwillingness to make a compromise to reach a deal over aid. Pelosi and Mnuchin will continue to narrow their difference, trying to provide a bill that could support the economy. The Dow Jones Industrial Average futures declined to 27984, the S&P500 futures dropped to 3402, and Nasdaq futures descended to 11591.


Precious metal prices continued to trade in a tight range as investors await more solid decisions on stimulus. The price of a gold ounce rose to $1931, failing to break above the previous top of $1933, then retreating to $1910-20 range. Meanwhile, the price of a silver ounce hovered around $25, and palladium futures held steady above $2400.


Oil prices declined as demand woes outweighed to impact of a drop in US inventories. Investors are afraid of the effect of the second wave of Coronavirus on economic activity and oil-demand levels. On the other hand, the US Energy Information Administration reported a drop of 1.001 million barrels in US inventories, almost similar to expectations. The West Texas Intermediate crude December delivery declined to $39.70, and Brent Blend December delivery fell to $41.45.

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