HomeContributorsFundamental AnalysisBritish Pound Rebounds, Investors Eye Fed Minutes

British Pound Rebounds, Investors Eye Fed Minutes

GBP/USD has gained ground in the Wednesday session, after posting considerable losses on Tuesday. In North American trade, the pair is trading at 1.2768, up 0.44% on the day. On the release front, there are no major British indicators. In the U.S., the key event is the minutes from the Fed policy meeting in December. On Thursday, the U.S. releases unemployment claims and Fed Chair Powell will speak at an event in Washington.

The pound remains relatively steady, but could this be the calm before the storm? Parliament is scheduled to debate and then vote on the Brexit withdrawal agreement next week, and tensions are running high ahead of the vote. Prime Minister May still faces an uphill battle to push the deal through parliament, as she must contend with opposition from the Labor party as well as part of her own Conservatives. If May fails to win the vote, a no-deal Brexit could be the result. This has raised alarm bells among business and industry leaders, who have said they will implement ‘public interventions’ to inform the public about the danger of a no-deal scenario, if May loses the vote in parliament. If Britain leaves the EU with no agreement in place, the economy is expected to weaken and the pound would likely fall.

Investor optimism is higher this week, as hopes are high that trade tensions between the U.S. and China could ease. The world’s two largest economies have been engaged in a nasty tariff spat, which has rocked the markets in recent weeks and threatens to put a chill on global growth. Chinese and U.S. officials were scheduled to hold a two day meeting at the start of the week, but the talks were extended for a third day on Wednesday. This has raised hopes that the sides are making progress. The stakes are high, as President Trump has threatened to impose higher tariffs on $250 billion worth of Chinese products if there is no deal by March 1. If the nasty trade war shows signs of easing, risk appetite could grow and make the safe-haven yen less attractive.

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