The pound made gains on Tuesday and was heading for six-week highs against the dollar. Investors continued to cut their short positions despite Prime Minister Boris Johnson pledging to take the UK out of the EU by the 31st of October. Investors were concerned that betting against the currency would backfire if it continued the rally it started on last week.
The pound was up 0.4% against the dollar as it was also helped by a weakened greenback. Johnson is required by law to ask for a three-month delay to the UK’s exit date however his team are looking for ways to circumvent this law. In addition, the UK’s Supreme Court has begun hearing arguments that Johnson’s suspension of parliament is unlawful, as was previously declared by a Scottish high court judge. The hearing will conclude on Thursday.
This morning, weak inflation data has caused the pound to fall. Prices in August grew at their slowest place since late 2016. The pound has fallen 0.3% against the dollar on the release of the data.
GBPUSD opened at 1.2398 and made strong gains all day. Closing near a high of 1.2519. This morning it has fallen back down to 1.2455
GBPEUR followed a similar pattern. Opening at 1.1254 and closing near a high of 1.1307. This morning it hit a low of 1.1271
The dollar fell on Tuesday as traders were expecting a rate-cut to come from the Federal Reserve meeting today. A stronger euro and lower oil prices also factored into dollar weakness. Oil production in Saudi Arabia has been fully restored after yesterday's attacks, according to the kingdom’s energy minister, reducing demand for safe-haven currencies. The dollar index was 0.35% lower and investors are expecting a 0.25% rate-cut later today.
The euro was up 0.59% against the dollar after a survey showed German investor confidence alongside more recent positive economic data out of the eurozone.
EURUSD opened at 1.1017 and made steady gains across the day. Closing at a high of 1.1071