The dollar strengthens against the euro, so does the pound

At around 9 p.m., the euro lost 0.45% to $ 1.1794, after very accommodating monetary policy statements from the Fed, which forecasts rates close to zero until 2023.

The dollar regained strength against the euro on Wednesday after a monetary meeting of the US Federal Reserve (Fed), while the pound recovered sharply as the market regained confidence in negotiations between the European Union and the United Kingdom.

At around 7:00 p.m. GMT (9:00 p.m. in Paris), the euro lost 0.45% to $ 1.1794, after very accommodating monetary policy statements from the Fed, which forecasts rates close to zero until 2023. The pound was gaining meanwhile 0.44% against the greenback, at 1.2946 dollars, and 0.88% against the European currency, at 91.06 pence per euro.

Investors took note on Wednesday of the monetary policy decision of the US Central Bank (Fed), which promised it would keep rates low as long as inflation does not slightly exceed 2% “for a while”.

Its forecasts do not envisage a rise in inflation to this level before the end of 2023.

Fed Chairman Jerome Powell also asserted that further financial assistance to U.S. households and businesses would “likely be necessary” to enable the economy to recover from the crisis caused by the COVID-19 pandemic.

Also in the United States, disappointing retail sales – although up (+ 0.6%) – for August also caught the eye of forex traders, providing information on the health of consumers and their spending cravings.

The pound recovered after losing 3.6% against the euro and the dollar last week, shaken by tensions in negotiations over the post-Brexit relationship.

“Discussions around a compromise (with rebel MPs) on the government’s internal market bill seem to be giving the pound a boost,” said Michael Hewson, analyst for CMC Markets.

This text aimed at reversing the first Brexit agreement, concluded last year, infuriated Europeans but passed a first stage in the British Parliament on Monday. Its future is not, however, all mapped out, while it arouses discontent even in the ranks of the majority.

Any prospect of the talks failing weighs on the pound as it would be seen by markets as an economic disaster for the UK, while any progress is welcomed by investors.

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