Brexit deal: Dollar falls from 17-month highs; Euro and GBP strike back

Chris L
Category:  Financial News
The dollar is trading down on Monday as investors are taking risks following a Wall Street positive session and news on a done-deal Brexit. The Euro is still under pressure as the Italian crisis is still alive, but Brexit hopes are fueling the single currency as well as the British Pound.

The Dollar index is trading 0.53% down on Tuesday as investors are betting on riskier assets and following Monday's rally to 97.70 where the index reached its highest level since June 2017. The pair is now trading at 97.10 as it is performing negatively for the first time in five days. 

The EUR/USD is trading 0.60% positive on Tuesday as the pair stopped a four trading days decline from 1.1500 on November 7 to 1.1215 on November 13. It was its lowest level since June 2017, but it also worked as a floor where the pair built up a bounce which drove it to current 1.1285. 

The euro is joining the pro-risk environment following the headlines that suggest the Brexit deal is done. However, it is still under pressure by the Italian budget crisis as the government is still in talks to get the approval from a reluctant European commission. 

Giovanni Tria, Italian Finance Minister, said they would not change its deficit spending plans of 2.4% of GDP. However, he offered to lower government's estimate for 2019 economic growth to 1% from 1.5%. It would cut in fact, spending plans ratio of GDP, however, if the forecast is wrong, it could make Italy have an even bigger GDP deficit. 

GBP/USD rallies on Brexit news

The British Pound is trading higher on Tuesday as investors are welcoming Brexit news on a possible deal reached by officials. GBP/USD has almost recovered the last two trading days of losses, including opening week negative gap. 

According to The Times political editor Francis Elliott, UK Prime Minister Theresa May is expected to present ministers with the draft Brexit deal on Wednesday. The cabinet is expected to sign off the text tomorrow. 

The Sterling is rallying on Tuesday as GBP/USD is trading 1.40% positive on the day at 1.3030. The pair is recovering Monday losses and filling the opening week negative gap. However, GBP/USD should consolidate levels above 1.3000 to confirm bulls have taken the control over the pair. 
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