Pound rides high on Brexit hopes - gold drops to lowest price since July
30 Nov 2017 By Steve Ward
Overnight Wednesday, pound Sterling reached a 2-month high against the US Dollar of 1.3390. The rise came as glimmers of light appeared at the end of the seemingly interminable Brexit tunnel. The Guardian along with other papers reported the hopes of progress, stating, "The UK has bowed to EU demands on the Brexit divorce bill in a move that could result in the UK paying £50bn to Brussels, in an attempt to get France and Germany to agree to move negotiations to trade." However, Prime Minister May refused to confirm the stories. EU leaders have given her until Monday to make a new offer whilst the under-pressure Prime Minister confirmed on Wednesday that the UK was "still in negotiation".
Despite the gains to the Pound and the tantalising possibility of progress in Brexit talks, the news was not welcomed by many on the government's back benches. Speaking in the Commons, Philip Davies, the outspoken MP for Shipley in West Yorkshire, slammed the possible payment. He said the UK should stick to the bare legally required sum and “not a penny more and not a penny less”.
US Dollar makes steady progress
Notwithstanding the gains made against it by the Sterling, the US Dollar itself strengthened across the board on better than expected economic data. The US Bureau of Economic Analysis reported US economy expanded by 3% in the three months to the end of June, growing at its fastest pace in more than two years. This is a rise from the earlier estimate of 2.6%. Increasing expectations that Trump's tax reform legislation will soon be passed also added to demand for the US Dollar.
Falling gold price boosts demand - lowest price since summer
New and extremely worrying missile testing by North Korea did little to drive up the gold price, however, the precious metal lost over 1% on Wednesday following better than expected US economic figures and a strengthening Pound. This continued today forcing gold to its lowest price since July. Despite this, physical gold sales remain very strong as investors take advantage of the price dip.
Bitcoin surges but retreats
The swinging fortunes of both Pound and US Dollar are positively mundane when compared to Bitcoin. 'Volatile' hardly describes its activity over past few days; from a record high of £8,476 it fell 18% on Wednesday to £6,914. Later in the afternoon, it was trading at around £7,290 with exchanges struggling to keep up with the surging demand. All this activity only heightens debate about its future. Aswath Damodaran, a professor of corporate finance and valuation at New York University's Stern School of Business, noted, "it could be just another fad!"