The Pound spiked to 1.31 against the Dollar yesterday, 1 October after a report the UK was mulling over a compromise on the Irish border.
However, the move was short-lived as Sterling dropped to $1.2990 – its lowest level in one month – following UK Brexit minister Dominic Raab’s warning to the European Union (EU) against bulling Britain into signing a deal that would undermine its unity. He also suggested that if the EU “threatens the integrity of our union”, there would be no choice but to leave with no deal.
Meanwhile, the US is showing signs its economy is slowing, which is evident in the manufacturing sector. The manufacturing Purchasing Managers’ Index (PMI) for September remained at 55.6. In addition, the data from the Institute for Supply Management (ISM) showed prices dipped last month.
Despite this, the Dollar Index, a measure of the greenback against other currencies, is now up by more than 1.6 per cent after the Federal Reserve’s (Fed) decision to raise interest rates last Wednesday, 26 September.
Focus today will shift to Fed Chair Jerome Powell who is scheduled to speak this evening. Analysts will listen for clues into the Fed’s next steps after the rise. Warning signs of slowing global growth may give the Fed a reason to pause, which is unlikely, and any hint the US central bank will continue or even speed up monetary policy tightening will drive the Dollar higher.
Data provided by