FXpert

The euro extended its gains on Friday to a two-month high as traders waited for U.S. President Donald Trump's response to China's tightening control over Hong Kong, which could further worsen tensions between the two over the financial hub.

The pound rose around half a percent against a weaker dollar on Thursday, but was little changed against the euro, as Brexit-related risks and speculation about negative interest rates continue to limit the pound's gains.

The U.S. dollar fell to a two-month low against the euro on Thursday as the common currency continued to bask in the glow of the recently announced 750 billion-euro (672 billion pounds) coronavirus recovery fund amid improved risk appetite, leading investors to favor riskier assets.

Short bets on China's yuan rose to a near eight-month high, a Reuters poll showed, as Beijing's proposed security bill for Hong Kong fuelled worries of a global fallout just as it tries to kick-start a post-lockdown economic recovery.

Sterling fell 1% on Wednesday as investors' focus shifted back to the possibility of negative interest rates in Britain and on comments from government officials that not much progress had been made in Brexit negotiations.

The pound rose against the dollar and euro on Tuesday, hitting a two-week high and holding above $1.235, boosted mainly by improving global risk appetite which saw the greenback fall.

The U.S. dollar fell across the board on Tuesday as optimism about a potential coronavirus vaccine and a reopening world economy helped investors shrug off U.S.-China tensions, sapping demand for safe-haven assets.

The euro steadied around the $1.09 level on Monday in a potentially big week for European policymakers as they debate the outlines of a recovery fund aimed at helping member nations.

Sterling edged lower against the dollar on Friday as tensions between China and the United States boosted demand for the greenback, but it recovered against the euro.