The Pound to US Dollar exchange rate weakened by almost three cents last week to hit its lowest level in 31-year, barring the ‘flash crash’ at the beginning of October.
PM May Sends Sterling Skidding To New Lows
Sterling tumbled to fresh three-month lows versus the US Dollar last week in reaction to remarks from UK Prime Minister Theresa May suggesting that Britain was headed for a future outside of the single market. May said that Brexit was ‘not about keeping bits of [EU] membership’ and hinted that immigration would be prioritised over trade, in the upcoming negotiations. This sent GBP/USD spiralling lower.
‘Cable’ settled just above technical support on Tuesday but Sterling remained pressured by fears of a ‘hard Brexit’.
There was some reprieve for GBP/USD on Wednesday when President-elect Donald Trump failed to outline plans for fiscal stimulus, disappointing market expectations. Speaking in the US, Trump was forced to respond to unsubstantiated allegations that Russia has compromising information on him that President Vladimir Putin intends to use as leverage to influence goings on in Washington DC. The sensational speculation overshadowed the press conference, leaving the ‘Greenback’ to soften due to the lack of information on policy.
GBP/USD Near 31-Year Low
Fears of a ‘hard Brexit’ dragged the Pound lower again on Thursday as investors prepared for UK PM Theresa May’s next move.
And ‘Cable’ tumbled to its lowest level in 31-years – barring the one-hour ‘flash crash’ at the start of October – over the weekend in reaction to reports suggesting May will explain plans to take Britain out of the single market and the EU customs union on Tuesday.
Week Ahead
Although there are a number of key ecostats due for release this week, the Theresa May speech on Tuesday is likely to steal the show.
UK inflation is set to hit a near-three-year high of 1.4%, unemployment is tipped to remain at an 11-year low of 4.8% and retail sales volumes are expected to increase 7.5%, but the Pound is not liable to appreciate unless the PM opts to strike a softer stance on Brexit.
Across the pond in the US, inflation is set to hit a three-year high of 2.1%, which should buoy demand for the ‘Greenback’. While Trump’s inauguration on Friday could create some market volatility if the outspoken Republican catches traders off-guard with any new information on policy.