FX round-up: Sterling continues to shine on Brexit deal, greenback slips again

Digital Look WebFG News | 30 Nov, 2017 17:47 - Updated: 17:47 | | |

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The pound's month long rally was still very much in play on Thursday as news of a Northern Ireland border resolution deal filtered through.

Over in the US, the dollar came under intense selling pressure to trade 0.42% lower against a basket of currencies, as the dollar index slid to 92.773 by 1600 GMT, only to recover to 92.992 just an hour later.

Up 1.9% so far this month against it's US counterpart, the pound continued to trade higher on Thursday, 0.97% firmer to 1.3539, marking a new two month high.

The rally came in light of a Times report that stated the UK was close to a solution over the Northern Ireland border issue, possibly coming under pressure from the Democratic Unionist Party (DUP), who were reported as saying that it would be "deeply destabilising" for the deal they struck earlier this year to keep May in power, if Northern Ireland was to stay in the single market, customs union or regulatory equivalent.

Earlier in the week, media reports circulated that London and Brussels had a greed a divorce bill in the region of 50 billion Euro.

Although the figure has not actually been agreed or confirmed by either side, the positive tone surrounding both the Irish and divorce bill sticking points have been key support for stirling this week.

On the data front, the US received a string of good news with unemployment claims down to 238,000 and a positive Chicago PMI reading of 63.9, beating analyst forecasts of 62.2.

None of this good news, however, helped the dollar trading against the euro, as the pair rallied 0.52% to 1.1908, breaking a tight 1.1823/66 range seen over the last 2 days.

"The upside for the dollar looks limited for now and euro/dollar is set to rise as the growth story in Europe gathers momentum," said Morten Helt, a senior FX strategist at Danske Bank.

European data out in the morning showed a fall in German retail sales to -1.2%, as well as disappointing eurozone CPI and core CPI estimates of 1.5% and 0.9% respectively.

The single currency lost marginal ground against the pound, as GBP/EUR traded 0.15% higher to 1.1337 after hitting a day high of 1.1394.

Over in Asia, the Japanese yen saw some choppy trading as it weakened against the dollar, with USD/JPY trading 0.23% up to 112.18, helped by a decent dollar push late in the session.

Down-under, the Australian dollar benefited from positive domestic and Chinese data, as figures showed Aussie building approvals were up 0.9% while Chinese manufacturing PMI data nudged higher to 51.8.

AUD/USD was up 0.03% to 0.7573 on the day, after hitting a day high of 0.7594, another victim of end of session dollar strength seen across most dollar crosses by the London close.

"The outlook for investment is increasingly good, led by the non-mining industries, and even the drag from the mining sector continues to lessen," said ANZ senior economist Daniel Gradwell.

"The way that strength in surveyed business conditions is converting into actual investment is encouraging." he added.

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