👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Pound Rallies as Risk Assets Jump, but Brexit Worries Will Resurface, JPM Says

Published 07/20/2020, 01:55 PM
Updated 07/20/2020, 02:05 PM
© Reuters.
GBP/USD
-

By Yasin

Investing.com – The pound racked up gains against the dollar on Monday and continued to ride on the coattails of rising U.S. stocks, but Brexit concerns will soon return as the main driver of sterling, JPMorgan said.

GBP/USD rose 0.67% to $1.2649.

Cable has found its footing since falling three weeks in a row since June 21 with the currency pair, trading as a risk asset, rising in tandem with U.S. equities. This correlation is understandable as the U.K. is "the largest capital importer within G10," JPMorgan said.

But as equities move into range-bound trading, and the Brexit process comes to a head in the next few months, it is likely to "expect that GBP will become rather less dependent on general risk sentiment, and hence start to decouple from other high-beta currencies," the bank added.

The latest jump in the pound comes even as further reports suggest that the risk of the U.K. leaving the European Union without a deal continues to gather pace.

As the UK and EU resumed talks on a deal in London on Monday, former President of the EU Commission Jean-Claude Juncker reportedly claimed that U.K. Prime Minister Boris Johnson was "purposefully" pushing for a no deal Brexit.

The pound has also been bolstered by ongoing signs that demand for the dollar remains in the doldrums.

Net shorts (bearish positions) on the dollar climbed 9% in the week ended 14 July, the highest level in the last three weeks, according to Commodity Futures Trading Commission (CFTC) data.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.