The pound is benefitting from increased optimism around a Brexit deal with the European Union, but a miss on GDP and manufacturing data is holding it back. U.S. Treasury yields dipped, causing the dollar to give back some gains from Tuesday.
Trump: “I like low interest rates”
President Trump took a moment Tuesday to continue to express his disapproval of interest rate increases by the Federal Reserve.
“I don’t like it,” Trump said. “I think we don’t have to go as fast.”
The Fed has largely ignored the Trump’s complaints, moving forward with interest rate increases as recent as Sept. 26.
The Fed, and Chairman Powell have a job to raise interest rates gradually to prevent overheating but not too fast that growth is cut off.
Dollar gives back gains
U.S. Treasury yields dipped, causing the dollar to give back its gains from Tuesday to the pound and the euro.
The 10-year yield hit 7 year highs Tuesday, but then hit 7-week lows before climbing back up to 3.22%.
The EUR/USD rose on the movement, climbing up from 1.143 to 1.150 Tuesday afternoon. The pair has been bouncing around the 1.150 mark as Italian budget concerns continue to hold back the euro.
GBP/USD also jumped Tuesday afternoon from 1.305 to 1.314. The pound is benefitting from more optimism around Brexit.
Pound rises on Brexit deal hopes
Officials from the U.K. and the E.U. are in Brussels negotiating a Brexit deal that could reportedly emerge by next Monday.
The officials are focusing on a deal that would temporarily allow the U.K. to remain in the E.U. customs regime. The solution would help avoid a hard border in Ireland.
In the past week, there has been an increased willingness to compromise as the deadline to Brexit approaches.
The pound is rising on the possibility of a deal, but worse-than-expected manufacturing data Wednesday morning also weighed on the currency.