September 19, 2020

The pound rose against the dollar and sharply against the euro the day after Article 50 was triggered


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By Thomas Colson From Business Insider

LONDON — The pound rose against the dollar and sharply against the euro on Thursday, as market jitters over the activation of Article 50 calmed and Germany’s inflation data shocked markets.

The pound is up 0.35% against the dollar to $1.2479 at 18.45 p.m. BST (1.45 p.m. ET) and up 1.06% against the euro to €1.1673 at the same time.

The sterling’s lift against the Eurozone currency came after Germany posted a March inflation reading of 1.5%, down from 2.2% in March and lower than the 1.9% consensus — a blow for the European Central Bank’s money-printing programme, which is designed to stoke inflation.

The UK government also triggered Article 50 on Wednesday in Brussels, officially beginning the two-year negotiation period for Britain’s exit from the European Union.

Markets had largely priced in the event before, meaning that the pound made relatively marginal losses against the dollar — and a slight gain on the euro — in Wednesday’s trading.

FXTM research analyst Lukman Otunuga says in an email that the sterling has turned “highly sensitive” as Brexit talks get underway.

He says: “Sterling could be instore for a very rocky ride moving forward as the Brexit talks officially get under way. With the remaining 27 EU member states meeting at the end of April to agree on the guidelines for the Brexit settlement and formal negations potentially starting as late as June, Sterling sensitivity may intensify as investors become jittery.

“With the hard Brexit fears lingering in the background and concerns of complications in the early stages of the negations weighing on sentiment, the bearish bias towards Sterling remains intact. While there is a possibility of the GBPUSD experiencing technical bounces as investors reposition, sellers may exploit the opportunities to install fresh rounds of selling. From a technical standpoint, the GBPUSD bears need to conquer 1.2400 to open a path lower towards 1.2300.”

Here is how that looks:

See the latest EUR-USD movements here.

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