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Forex: Pound Sterling hits monthly high

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The British pound peaks again on the Forex market, after declining its positive performance in early July.

The British currency seems to improve its performance, after a few tense days in the operations of the currency.

Well, investor doubts persisted about whether the UK could recover its economy after all the events that hit its economy.

British currency recovers

On Tuesday, the pound sterling achieves a clear improvement in the behavior of its Forex operations. This is because investor confidence sentiment improved thanks to the EU and progress in vaccine research for COVID-19.

The United Kingdom has been one of the countries that has suffered the most from the Coronavirus. In addition, the economy of this country had been dragging heavy stones since Brexit was approved.

This caused the economic recession in the United Kingdom to increase, affecting its performance in the Forex market. Well, investors did not trust the stability of the currency.

However, this Tuesday the situation improved for the British currency. After economic discussions on the part of the European Union bloc got under way at a good pace, and early data from trials of three possible COVID-19 vaccines yielded promising results, the pound peaks in the week.

Furthermore, this improvement is clearly driven by market sentiment, as it is optimistic.

Allowing investors to overlook poor British economic data and lack of concrete progress in Brexit trade talks.

This clear good performance of European currencies in the Forex market promises to be maintained only if positive results are generated from the EU summit. Well, on Monday there was a momentary withdrawal of the euro due to the tension of the eurozone economic agreements.

The pound recovered despite negative figures from the British economy

The pound achieves a maximum of 6 weeks. The currency had enjoyed its best day in three weeks on Monday, and on Tuesday it posted its highest. A clear upward trend based on the tense stability environment of the eurozone.

In addition to the above, some analysts believe that the relatively optimistic assessment of the British economy, made by the Bank of England’s chief economist, Andy Haldane, could also be supporting the pound.

Meanwhile, data showed that British government loans reached a record £ 127.9 billion ($ 162 billion) in the first three months of the 2020/21 fiscal year, more than double the previous year’s total. Which represents five times more than the previous year.

The British pound achieves a maximum of 6 weeks in the Forex market, despite the negative figures of the British economy.
The British pound achieves a maximum of 6 weeks in the Forex market, despite the negative figures of the British economy. Source: Reuters

Britain’s debt-to-GDP ratio is likely to hit 100% soon, the UK Office of Budgetary Responsibility on Tuesday afternoon, and this will affect the performance of the pound.

Pound sterling to date

At time of writing, the pound is trading at its GBP / USD $ 1.2738 pair, the highest value since June 11, an increase of 0.66% on the day. Against the euro, the pound sterling manages to reaffirm 0.4% at 90.12 pence, around a maximum of one week.

Pound sterling achieves maximum of 6 weeks in the Forex market.
Pound sterling achieves maximum of 6 weeks in the Forex market. Source: Yahoo Finance

In summary, the pound seems to regain its stability. However, the figures of its economy promise that it will falter in the Forex market again.

Well, the upward trend on the part of investors could only be maintained if the tensions of the trade agreements after Brexit finished materializing.

Commerzbank analysts said the state of the economy and Brexit risks meant that the pound “would have to fight strong headwinds.” Especially if the state of the economy forces the Bank of England to consider negative interest rates at its August meeting.



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