GBP/USD Surges Above 1.25
GBP/USD above 1.2500
European Commission President Juncker told the UK on Thursday (September 19), “We can reach an agreement on the Brexit.”
According to British Sky News, Juncker believes that the Brexit agreement can be confirmed by October 31.
Juncker said that the UK’s non-agreement to withdraw from Europe will have “disastrous consequences” and said that he is “making every effort to reach an agreement.” He also stated that if the requirements of the security agreement can be met through alternative arrangements, then we do not need a security agreement.
In an exclusive interview with British Sky TV Sophy Ridge, Juncker confirmed that British Prime Minister Johnson submitted a document to him, outlining the draft of the new Brexit agreement in the UK.
However, Juncker said the letters were delivered late Wednesday night, and he has not read them yet.
After the news came, the British pound against the US dollar surged about 70 points in short-term, the day rose more than 0.7%, refreshing the day high to 1.2552. Also, the euro against the British pound fell nearly 40 points to 1.8807.
The US Dollar index weakens for the 7th straight day as investors’ appetite for risk increases. The AUD/USD has broken the 0.69 mark, with the USD weaker against its G10 currencies, with global indices rising on forward optimism on a quicker recovery from the effects of the Coronavirus. US Indices have seemed to quickly discount the effects of the protests as they continue for the 8th straight day.
A couple of weeks ago, I wrote an article about the decorrelation between Wall Street and Main street. Back then, this was related to the Coronavirus’s impact on everyone in the light of Wall Street’s impressive rally. While Main street is still reeling from the devastation the Coronavirus has brought, current protests due to another incident involving a white policeman killing a black man have sparked outrage all over the country.
Will Hong Kong abandon the peg against the USD? The financial hub of Asia, which connects the East to the West has been in the middle of pissing contest between the United States and China, not to mention their domestic struggle between them and China. If protests for autonomy in Hong Kong continue, and President Trump implements drastic foreign policy measures against Hong Kong, extreme capital outflows may ensue, forcing the Hong Kong Monetary Authority to abandon its peg on the U.S. dollar.
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