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Pound Continues to Improve on Weak USD Forex Market

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  • Sterling Continues to Recover as Dollar Shows Weakness
  • Dollar Depressed as CPI Posts Record Fall
  • Fears for Oil deal Following Breakthrough

There is still little to cheer about for forex traders heading into the holiday weekend. With most major markets closed for Good Friday, there was still time for market movements though. The US Dollar is continuing to weaken and will not have been helped by some of the poorest CPI figures in years released today by the Labor Department. The GBP though has capitalized on this and some of its own positive news with the improving condition of PM Boris Johnson.

GBP Racks Up Fourth Consecutive Day of Gains

Moving back toward a key resistance level at 1.25 that will please the forex market, Sterling remains on course for what would be a fourth consecutive day of improvements. This also brings it closer to a four-week high. With little economic data coming out of the UK today, the currency seems to have been buoyed by good news that British Prime Minister Boris Johnson has been released from ICU. Though he remains in hospital recovering from the coronavirus, this marks a substantial improvement on the previous days.

While the market appears to have reacted positively to this news, it is also likely a sign of the USD weakening slightly as much as it is strength in the Pound. As the US posted more than 450,000 cases of COVID-19 to date, with the total in New York now standing higher even than any other country, it has become clear that the battle is far from won and that the shutdown may continue even longer than expected.

Biggest CPI Fall in Five Years

Market confidence heading into Easter will certainly not have been helped by the release today of US CPI figures either. While nobody is expecting great positives during the current period, the results were worse than analysts had predicted. The 0.4% drop last month marks the biggest single month fall in five years as collection of the data was also impacted by the large-scale business closures.

With supply chains completely disrupted, and a further 6.6 million people filing for unemployment in the last week, fears continue to persist on a potential global recession that could last in to 2022 at least.

Mexican Objection Puts Opec Deal in Doubt

Oil prices also continued to drop on Friday, more than 2.5% in the case of Brent crude which was trading at $32 per barrel at the time of writing. This is bad news for currencies like the Canadian Dollar and other forex market pairs which are heavily linked to oil markets.

This came as a deal to cut global supplies by 10% and end the ongoing standoff between Russia and Saudi Arabia was all but reached. With Mexico refusing to sign up to its share of the cuts though, the deal has been cast into doubt, with more last minute discussions due later today.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.