GBP/USD Exchange Rate Battered by ‘No-deal’ Brexit Fears
The Pound US Dollar (GBP/USD) exchange rate was driven to a new 13-month low last week, with Sterling suffering heavy losses following speculation that the UK may be hurtling towards a ‘no-deal’ Brexit.
This came in the wake of comments from the UK’s international trade secretary Liam Fox. Fox left GBP exchange rates reeling as he stated that the chances of Britain crashing out of the EU without a deal were about 60%.
A broad upswing in demand for the US Dollar exacerbated these losses, as the US and China engaged in another tit-for-tat tariff spat.
However these concerns took a back seat at the very tail end of the week, with the GBP/USD exchange rate sliding below $1.28 as a roughly 20% fall in the Turkish Lira (TRY) sent shockwaves across financial markets.
These concerns saw markets largely ignore the UK’s latest GDP figures as investors scrambled towards safe-haven currencies like the US Dollar.
US Dollar (USD) Exchange Rate Surges as Emerging Market Sell-Off Accelerates
The Pound US Dollar (GBP/USD) exchange rate looks set to continue to trend lower at the start of this week’s session as Turkey’s currency crisis continues to dominate market movement.
The Turkish Lira (TRY) is currently down around 7% this morning as President Recep Tayyip Erdoğan’s defiant tone over the weekend failed to inspire confidence.
This brings the Lira’s losses to around 25% in the last week alone, driving a sell-off of most emerging currencies as contagion fears spread.
Unsurprisingly this has led to another marked uptick in demand for the US Dollar and other safe-haven currencies as investors fleeing emerging markets look for safe harbour elsewhere.
This has also left the Pound largely muted this morning amid a lull in domestic data and a lack of Brexit headlines.
GBP/USD Exchange Rate Forecast: Will UK Inflation and Wage Figures Support Sterling?
Looking to the week ahead, markets will be looking for a possible rally in the Pound US Dollar (GBP/USD) exchange rate with the release of the UK’s latest wage growth and CPI figures.
A rise in either could provide Sterling with some much needed relief and prevent the GBP/USD exchange rate from falling to new lows.
Currently economists are only forecasting an uptick in the UK’s latest Inflation reading however, with average earning expected to have remained steady in June, meaning any potential rise in the Pound is likely to limited.
Meanwhile, the only US release of note this week will be the latest US retail sales figures, with an expected slowdown in sales growth last month possibly undermining some of USDs recent gains.