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U.K. Sterling Advances Against US Dollar and Euro Tuesday

Sterling rose against the greenback and the euro Tuesday, as Britain’s fractious trade discussions with the EU and expectations of rate reductions to counter coronavirus damage held the currency near recent 4-1/2-month lows.

U.K. Sterling Advances Against US Dollar and Euro Tuesday

British PM Boris Johnson has raised EU hackles by saying Britain will not be sure by EU guidelines or the jurisdiction of its prime court.

The first round of negotiations with the EU’s administrative unit, the European Commission, is due to last until Thursday, with half a trillion euros’ worth of yearly trade at stake.

Sterling, which has come under heavy selling stress in recent days, regained some ground.

The currency stood at 86.94 pence per euro, up almost 0.3% on that day, having skid over 1% Monday.

In opposition to the greenback, sterling was up 0.3% at $1.2791, holding above a recent 4-1/2 month low of nearly $1.2726.

The trade negotiations have been overshadowed by deepening concerns over the spread of coronavirus and uncertainty over the extent of the economic damage it could trigger.

Market expectations have grown for central banks to cut rates of interest to curb the fallout, including possibly through coordinated action. Policymakers from developed nations, along with Britain, are to hold a conference call to debate the next steps reports suggested no immediate stimulus would be offered.

Current Bank of England (BoE) Governor Mark Carney told legislators Tuesday he expected a “highly effective and timely” global response to the economic blow from coronavirus.

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Currencies News

Sterling Bounces Towards Six-week High Against Greenback

Sterling headed towards six-week highs against the greenback on Tuesday as investors continued to cut their short positions, even as the U.K. PM Boris Johnson stuck to his promise to take the U.K. out of the European Union by 31 October.

Experts said traders were proceeding to reverse their guesses against the currency as they cautioned about being caught on the wrong side should the pound further extend a rally it began last week.

A broader weaker greenback also supported the pound in shifting higher Tuesday.

Boris Johnson is required by a law passed this month to ask the EU for a three-month stay on Brexit if a divorce agreement is not approved by Oct. 19; however, British media reported that his team has ways to circumvent it. Johnson stated Monday Brexit would happen on Oct. 31, with or without a deal.

Britain’s supreme court has begun to hear the federal government’s argument that Johnson’s choice to suspend parliament until the Brexit date was not unlawful as Scottish judges ruled last week.

His opponent parties say the suspension was aimed at impeding parliament from stopping a no-deal Brexit, an accusation Johnson refuses.

The currency has firmed over 3% in August, its gains accelerating after parliament passed the law ruling out no-deal Brexit. It hikes 1.3% last Friday, grasping at a headline — later denied — that Johnson’s Northern Ireland allies might soften their Brexit stance.

Pound Monday hit a six-week high of $1.2515. The currency was struck by the volatile greenback, which surged late on Monday as oil prices eased and trade strains with Japan appeared to cool.

Traders are now bracing up for the U.S. Federal Reserve’s policy meeting this week.