On Tuesday, the British Pound (GBP) had one of its best single-day performances against the US Dollar (USD) ever. Additionally, it broke above the key psychological level of 1.3500. With this move, GBP/USD has now rallied to multi-day highs, underscoring the impressive reversal of fortunes seen across market themes. The pound’s value has increased by an astonishing 29%. This increase is occurring even as the US Dollar has been under pressure lately with trade tensions continuing to roil markets and fears growing that the Federal Reserve is losing its independence.
Once GBP/USD blew past the 1.3500 level, it picked up even more steam. Analysts pointed out that this increase is on the heels of general upward trends in the market, especially the continued weakening of the US Dollar. Political news, particularly confusion surrounding leadership in Congress, is the main culprit sending the Dollar tumbling. This decline has only been exacerbated by growing uncertainty in the future of trade relations.
Mirroring GBP’s appreciation, the Euro strengthened against the Dollar. Currency pair EUR/USD spiked, reaching two week highs just below 1.1760. This rush means a strengthening Euro, at the very moment the Dollar is under similar twin pressures. It seems that investors are recalibrating their stance, which has contributed to this upward spike in most currency pairs.
Gold prices have seen remarkable gains. The rare metal has rallied above $3,400 an troy ounce, scoring new five week highs Tuesday. This powerful rebound coincides with the US Dollar’s persistent downtrend. Meanwhile, yields in the United States are declining across the curve. While trade tensions are unlikely to subside any time soon, they keep high gold’s lure as a safe-haven investment.
Market analysts are calling out the effects of worsening trade tensions and falling US yields. These three factors are combining to produce a particularly favorable environment for gold’s improvement. Investors are turning to gold as a hedge against market chaos. Now, with the recent surge in uncertainty, many are running for the hills and abandoning riskier assets.