The pound rose from multi-year lows on Monday against the euro and US dollar, helped by political uncertainty in Italy which drew investor attention temporarily away from Brexit related concerns.
GBPUSD traded up from an early morning low of 1.2031 by nearly 0.6% reaching a session high of 1.2099 in the afternoon before closing at 1.2072, giving the pound its biggest daily rise against the dollar in 3 weeks.
GBPEUR rose sharply before markets opened from a low of 1.0733 to 1.0804 as the London session started. The pound gradually gave up some of its gains as the day continued, eventually closing at 1.0770.
During his visit to the UK, US National Security Adviser John Bolton told British officials that President Trump is fully behind the new British government, supporting the decision to leave the EU and has pledged support with a free trade agreement between the US and UK. Reports have said the relationship between the US and UK has improved since Johnson’s appointment as PM following sometimes tense ties between Trump and former PM Theresa May.
The US dollar fell on Monday morning as investors continue to believe the ongoing US – China trade is going to have a negative effect on the US economy. Some analysts believe there won’t be any sort of firm resolution between the 2 superpowers until at least after the 2020 US Presidential elections and continued doubt over trade policy could lead US based companies to reduce their capital expenditure, employ less new workers and produce less. The dollar index dropped to 97.33.
The euro remained under pressure following the political developments in Italy and German IFO business surveys which highlighted worsening current conditions and optimism about conditions in the third quarter.
EURUSD fell from 1.1211 to a low of 1.1164 but bounced in the afternoon to a high of 1.1230.
Elsewhere the Argentinian peso crashed by nearly 15% against the US dollar to 52.15, having briefly touched a record low of 61.99 as Argentina’s President Mauricio Macri suffered a political mauling leading to fears of a return to interventionist policies and rising debt levels.
