The pairing has edged higher as the US dollar safe-haven weakened on increased risk appetite following the announcement that US-China trade talks are in their “final laps”, according to the US Trade Secretary Steven Mnuchin. Mr Mnuchin said: “I think both sides have a desire to reach an agreement. We’ve made a lot of progress.” However, World Economic Forum President, Børge Brende, highlighted some of the difficulties that the superpowers face, saying that there are numerous technical issues which could hold back a trade deal.
Mr Brende sounded optimistic in his conclusion, however.
He said: “If they find a way out to break that impasse that has been created, I think that can also add additional growth to the global economy — that’s needed.”
“I think they are now pretty close to the moment where there will be a breakthrough.”
US dollar traders will be awaiting today’s slew of US economic data, which mainly focuses on expenditure.
The pound, meanwhile, has gained against the weakened greenback as traders await a speech by the Bank of England’s Mark Carney this morning.
Analysts expect Mr Carney to discuss fintech’s influence on the financial system, while likely avoiding comments on monetary policy, meaning markets are not expecting anything that would alter the pound’s strength.
In Brexit news meanwhile, concerns are rising among members of the Conservative Party as the sense of ‘Brexit betrayal’ is expected to weigh heavily on upcoming local elections, and ahead of the 23 May European elections.
Brandon Lewis, the Chairman of the Conservative Party, said: “If Parliament can look at making sure they are delivering on the referendum, there is still time and the potential to avoid fighting these elections.
“But Parliament has got to come together and agree it is going to vote to leave the EU.”
Cross-party talks between Labour and the Conservatives are expected to heat up again this week, and Sterling traders are becoming increasingly jittery that the two parties will fail to break the present impasse.
The pound US dollar exchange rate will remain sensitive to any Brexit developments this week, with the pound likely benefiting from any signs of a break in the current political deadlock.