FX round-up: Pound gains versus US dollar, but dips against the euro

The pound was weaker against the euro at the start of the week, as investors waited for a breakthrough on Brexit despite news that talks between the government and the Labour party had failed to yield any concrete results.

So with under five days left to go until the UK was set to leave the European Union without a deal, as of 2144 BST the pound was drifting lower by 0.22% to 1.1599, although it was off its intra-session lows of 1.1567.

Helping to prop up Sterling was news after the market close in London that the Cooper bill calling on the Prime Minister to ask for an extension to Article 50, if needed, in order to avoid a hard Brexit had passed muster in the House of Lords.

Against the Greenback on the other hand it was a different, with the pound trading higher to 1.3063 amid a broad-based dip for the the US dollar, with the USD spot index down by 0.35% to 97.0510.

Commenting on the weakness in the US dollar during the Monday session, David Madden at CMC Markets UK said: "The US dollar index handed back a lot of last week’s gains. Saudi Arabia denied a report that they threatened to start selling oil in currencies other than the US dollar.

"The greenback in the global reserve currency, and major commodities are listed in terms of US dollars, and even the denial of the report rocked investor confidence in the currency."

To take note of, analysts at Danske Bank believed that a trade deal between the US and China would eventually help to put a floor under certain currency pairs, like euro/dollar, although the likes of the Japanese yen, in particular, would weaken against commodity currencies.

Nevertheless, in the case of euro/dollar, Danske expected said support to materialise over the next three to six months and not immediately; indeed, the broker expected the initial reaction to such an announcement to be between muted to negative.