The pound was boosted during the early half of the day on the back of comments from the UK PM May and this helped the pair to push through the 1.34 region during the course of trading yesterday before falling back lower during the US session as the dollar began to gain in strength across the board once again. The pound is likely to be buoyed over the short term based on the developments in the Brexit process as the volatility becomes lower as we head to the end of the year.
GBPUSD Buoyed by May Comments
The UK PM May had mentioned over the weekend that she was determined to push through the Brexit deal. The deal involves 2 major factors – one of which is the compensation that the UK is required to pay to the Eurozone and the other factor is the trade access that the UK would get post the Brexit. If and when the Eurozone and the UK leaders are able to agree on these 2 points, we should be getting a strong boost to the pound at that point of time.
So far, there has been some decent progress in the Brexit talks and the leaders agree that the talks have moved on to phase 2. This has helped to keep the bid under the pound and this is one of the reasons why we are seeing the GBPUSD pair continue to hover around the 1.34 region. On the other hand, anticipation is growing over the passage of the tax bill in the US and if and when that happens, which is only a matter of time, we are likely to see the dollar enter into a small bullish leg as the investors get into another round of dollar buying.
For the rest of the day, we do not have any major economic news from the UK or the US and so the focus is likely to be on the tax bill only for the short term. We can expect to see some choppy action in the leadup to the passage of the bill and some dollar strength post the bill passage.