GBP/USD Exchange Rate Comes Back to Life as Cabinet Office Minster says Deal could be Imminent
UPDATE: The Pound (GBP) is fighting back against the US Dollar (USD) today after Theresa May’s Minister for the Cabinet Office David Lidington told the BBC that a Brexit deal was ‘almost within touching distance.’
With time running out to secure a deal, his words reignited Sterling sentiment and sent the Pound 0.4% higher against USD today.
Adding that he hoped a deal could be reached within the next 48 hours, Mr Lidington said that he was ‘optimistic because we have managed to get things down to a small number of difficult issues outstanding.’
Pound US Dollar (GBP/USD) Exchange Rate Sinks as May’s Brexit Plans Come under Fire
The Pound (GBP) fell over 1% against the US Dollar (USD) this morning and is facing heavy losses against many of its other currency peers amid fresh Brexit uncertainty.
Sterling extends losses, down 1.1 pct at $1.2827 and headed for biggest daily decline since September pic.twitter.com/ew7cCUUNp7
— Andy Bruce (@BruceReuters) November 12, 2018
Potentially spurred on by Jo Johnson’s resignation last week, a number of senior cabinet members are thought to have voiced their opposition to the Prime Minister’s preferred Brexit plan over the weekend
Reports suggest this has led to May having to cancel an extra cabinet meeting scheduled for Monday, something that is likely to derail any chances of an emergency Brexit EU summit in November, and increases the risk of a no-deal Brexit occurring.
GBP/USD Exchange Rate Volatile in Wake of US Midterms, Brexit Developments
The Pound US Dollar (GBP/USD) exchange rate got off to a strong start last week, with GBP jumping on reports of a ‘secret’ Brexit deal to remain in the EU customs union and help sidestep the issue of an Irish backstop.
Sterling’s extreme sensitivity to Brexit headlines saw the currency continue to trend higher on Tuesday on nothing more than a verbal ‘thumbs up’ from Brexit Secretary Dominic Raab as he left Downing Street following a crunch cabinet meeting.
This upswing in GBP/USD was further accelerated by a drop in the US Dollar, with markets shying away from the currency as the US mid-term election resulted in a split in US Congress, an outcome that USD investors feared would dent Donald Trump’s ability to pass fiscal policies.
The drop in the US Dollar would prove to be short-lived however with investors flocking back to the currency in the second half of the week as a hawkish Federal Reserve helped reignite expectations for multiple rate hikes in 2019.
GBP/USD then retreated even further on Friday as the sudden resignation of Transport Minister Jo Johnson over opposition of Theresa May’s Brexit plans rippled through currency markets.
GBP/USD Exchange Rate Forecast: Will Robust UK Wage Growth Prompt Sterling Rally?
Looking ahead, the Pound US Dollar (GBP/USD) exchange rate may look to rally later in the week as a slew of UK economic data potentially diverts attention away from Brexit.
Kicking off the UK data releases this week will be the publication of Britain’s latest labour statistics, with a potential jump in Sterling being driven by September’s earnings figures if August’s bump in wage growth is shown to have carried through to the end of the third quarter.
Following this will be the release of the UK’s Consumer Price Index (CPI), with a forecasted rise in inflation in October potentially helping to strengthen GBP exchange rates if it is seen as boosting the chances of a Bank of England (BoE) rate hike in 2019.
Meanwhile the US economy will also be in focus this week with both US inflation and retail sales figures set to be published this week, with a bump in either likely to bolster the US Dollar and hinder any chances of a GBP/USD rally.