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Forex - Dollar Dented by Soaring Sterling on Barnier Boost

ForexSep 10, 2018 01:10PM ET
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© Reuters. The pound rose sharply on Monday against the dollar. - The dollar fell against its rivals Monday, knocked by a stronger pound in the wake of positive remarks on a Brexit deal from the European Union's chief negotiator Michel Barnier.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.34% to 95.06.

The pound hit a five-week high against the greenback as Barnier stoked investor hopes of the UK clinching a Brexit deal, after he told a forum in Slovenia that it was "realistic" to achieve a deal within a time frame of between six and eight weeks.

This comes amid reports that the EU is ready to give Barnier a mandate to offer concessions in order to strike a deal with Britain. The UK is slated to leave the European Union in less than seven months on March 29, 2019.

GBP/USD rose 0.85% to $1.3026.

Analysts warned, however, that the pound has been highly sensitive to Brexit-related headlines recently and sudden gains can soon be retraced in the absence of further confirmation.

The EUR/USD rose 0.41% to $1.1600.

The dollar also lost its footing against the Canadian dollar after falling from session highs, but weakness in oil prices kept gains in the oil-price-sensitive loonie in check.

USD/CAD fell 0.05% to C$1.3160 from a session high of C$1.3198.

Elsewhere, USD/JPY rose 0.08% to Y111.12, while AUD/USD rose 0.110% to $0.7112.

On the emerging market front, the USD/TRY continued its slump against the dollar and there is more pain ahead as Turkey's central bank could fail to meet heightened market expectations on Thursday when the bank is widely expected to raise rates, according to RBC.

RBC said comments by Turkey's central bank that it will take action after the recent strong August inflation figures have not only supported expectations for a rate hike, but has raised the hurdle for the bank to over-deliver, increasing the risk of a potential market reaction to the downside for the lira.

Forex - Dollar Dented by Soaring Sterling on Barnier Boost

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