The “Hard Brexit” speculations along with the recent upsurge of the Dollar, wrecked the support of the British currency, with GBP/USD renewing lows on Tuesday. The pair collapsed to a 1.21 level after the start of the New York trading following the speech of the Minneapolis FED head Neil Kashkari advocating the earlier rate hike. On Wednesday Pound pared declines recovering to a 1.23 level as the British Prime Minister Theresa May allowed the parliament to vote on her plan, which in turn eased investors’ concerns about the ruined ties with the EU.
The pound has dropped by 18 percent since the referendum especially accelerating in this month as the date of the formal split-up was announced and the Prime Minister takes a hostile stance towards the cooperation with European bloc.
According to the CFTC data, the bearish positions of the Pound rose to a new record-high level as the large investors and hedge funds expect the Hard Brexit to become a terrible ordeal for the UK, costing the country increased taxes, decreased exports and rising prices on some import goods such as cars.
The Greenback trades are nearly unchanged on Wednesday, stalling near an eight-month peak at 97.80 level. The investors are almost sure that the FED Funds rate will increase in November, pricing its probability to 91.7%.
The US currency rose by 0.34% against Euro, remaining nearly flat against the Swiss Franc and Yen, while falling against the Australian Dollar by 0.48% as the commodity market feels fine today.
The precious metals advance with the biggest recovery seen with Palladium, Gold rose by 0.12%. On the energy market, the crude oil trades in a green zone propelling by the bullish expectations of the API crude estimate in the US.
European equities retreat, as DAX fell 0.06%, and FTSE holds at its peak of 7050,20 points. The US and German government bonds extend declines, falling a second-week in a row, signalling an increased risk appetite on the markets. The yield on German bonds rose 113% to 0.055, while US bond yields rose 1.28% to 1,782.
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