Through trading on Tuesday, the Pound to US Dollar exchange rate climbed to the highest figure in five months according to the Foreign Exchange market. There was fresh hope around Brexit negotiations and this had a positive impact on the currency. There was an indication that a trade deal with the EU could be agreed next month. Through trading today, the UK’s consumer price index is likely to have a positive impact on the Pound following an increase in domestic inflation. At the end of Tuesday, the Pound finished the day at 1.1093 against the Euro and 1.3246 against the Dollar.
The Euro also pushed higher against the US Dollar although the currency remained fairly flat against many of its peers. Again, the growing rate of coronavirus infections across Europe is a cause for concern for investors as it could result in the Eurozone economy slowing down once more.
The US Dollar underperformed on Tuesday as the exchange rate against the Pound and the Euro collapsed to new lows. Investors sold off US Dollars following a lack of progress with a coronavirus stimulus package. The losses were made worse by the fact that the Federal Reserve will need to continue with its expansionary monetary policy for a longer period of time because of growing coronavirus infections.