The pound has also taken full advantage of the weakness in the dollar and has been moving higher over the last few days. The weakness in the dollar began with the FOMC minutes which turned out to be more dovish than what was expected and this helped the GBPUSD pair to move higher since then. It remains to be seen how long this move is likely to last.
Pound Move Still Unsure
Many of the traders are still sceptical of this move higher as a large part of the move happened when the US was in a holiday on account of Thanksgiving. It is only today that the US traders are to return to their desks after the long weekend and we could see some correction in the pair as the traders begin to take some profits off the table and also feel that the minutes may not have been so dovish after all. This could lead to the buying of dollars from such traders which would only add to the correction.
Another reason for the traders to be sceptical of this move is the fact that the Brexit talks have now reached a crucial stage and if reports are anything to go by, many of the observers are expecting the announcement of a major breakthrough in the talks within the next couple of weeks. If this does come through, then some believe that the UK might just choose to walk off without any deal rather than agree to something that does not given them an advantage. If this were the case, it would not be good for the UK economy and hence the pound and with this possibility still on the table, the move higher remains suspect.
Looking ahead to the rest of the day, we do not have any major news from the UK or the US and hence we are likely to see some consolidation during the early part of the day and we might see some correction later in the day when the traders in the US return back from their holidays.
This article was originally posted on FX Empire