Home Economy U.S. Dollar Trading Lower While British Pound Shows Promise

U.S. Dollar Trading Lower While British Pound Shows Promise

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After another ballistic missile test conducted by the Democratic People’s Republic of Korea, geopolitical tensions between that Asian nation and the United States have caused repercussions in the forex markets. After a dry and inconclusive response by U.S. President Donald Trump shortly after the missile launch, the dollar started ceding value against the Japanese yen and the British pound.

Prime Minister Shinto Abe ordered an emergency meeting of cabinet officials soon after the North Korean missile landed off the coast of Japan. The yen traded slightly higher after the missile test even though the report for national retail sales in October was lower than expected on a year-over-year basis.

The slight dip of the greenback was mostly reactionary since the USD index actually rose 0.38 percent, which suggests that forex traders will likely take positions on EUR/USD and JPY/USD since a rebound is imminent. The Wednesday economic briefings from the U.S. were positive, and the Federal Reserve is still expected to raise interest rates in December.

A more interesting forex development was experienced in the United Kingdom, where the battered pound sterling continues to recover against all odds. The only positive news for British traders is that the Brexit negotiations with the European Union are poised to break deadlock status thanks to a potential agreement on the “divorce bill” must pay as it leaves the EU. This divorce bill is the payment that the UK is obligated to transfer to the EU due to prior commitments. A few days ago, political analysts believed that the UK would be on the hook for more than $55 billion; this amount has been revised downward to less than $50 billion.

Various reports from London do not paint a rosy picture for the British economy as the actual Brexit date gets closer, but the pound sterling does not seem to reflect the gloomy forecast. Forex analysts think that the slight dips of the dollar and the political instability of the White House are helping the pound retain its value against the dollar, and traders are waiting for any positive Brexit news to load up on GBP/USD before taking profits.

The most spectacular forex headlines of November were generated by Bitcoin, the controversial digital currency that is now valued at $10,000. On November 28, the trading volume of BTC/USD was calculated in billions of dollars, and there is now heavy speculation about the cryptocurrency reaching an exchange rate of $20,000 in 2018 .

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