Pound Sterling to US Dollar (GBP/USD) Exchange Rate Sinking despite Brexit Declaration

GBP/USD Exchange Rate Slumps on Back of Oil Price Drop

UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate has slumped over the course of the morning to a low of $1.2821 from highs of $1.2882.

In the oil markets, oil is continuing to drop, with Brent crude down 3% at $60.55 per barrel, the lowest figure since November 2017, and a 29% drop from the four-year high of $86.29 just over a month ago.

The US Markit PMIs for November were released this afternoon showing a decrease in both manufacturing and services.

Manufacturing dropped from 55.7 to 55.4, despite a predicted increase, and services dropped to 55.4 despite a predicted rise to 55, which could cause a potential strengthening of Sterling later this afternoon.

GBP/USD Exchange Rate Soars after Post-Brexit Draft Agreement Reached

The Pound Sterling US Dollar (GBP/USD) exchange rate soared over yesterday’s trading session as news regarding the UK-EU relations agreement was released.

There was little activity of the US front, as the markets remained closed for the Thanksgiving period, which allowed Sterling to push back even harder.

After a slight slump in the Pound this morning, Sterling was able to recover some of its losses when news emerged that the tensions between the UK and Spain over the Brexit deal in regard to Gibraltar has potentially been resolved.

The Chief Minister of Gibraltar told the BBC:

‘We’ve worked very hard and have in fact reached agreement with Spanish colleagues in respect of Gibraltar’s role in the withdrawal process […] in good faith, we’ve worked together and we’ve delivered.’

Despite this, Sterling has begun to slump against the US Dollar once again this morning and is currently down -0.4%.

GBP/USD Exchange Rate Jumps as PM says Brexit Deal ‘Within our Grasp’

The GBP/USD exchange rate rose over the course of Thursday, spiking to the highest levels of the past week, with inter-bank rates in the region of $1.29 by this morning.

This occurred as news that Theresa May was bringing a draft agreement regarding post-Brexit relations between the EU and UK back from Brussels.

The Prime Minister hailed the draft as ‘right for the whole of the UK’ and that a deal ‘is within our grasp’.

May stated that the deal would allow the UK to move onto and focus on other issues, such as the NHS.

GBP/USD Exchange Rate Up as Thanksgiving Shuts down US Markets

The recent lull in the USD against the Pound may be due to suggestions that the US Federal Reserve may be planning to pause its current tightening cycle after some dovish commentary.

A potential economic slowdown raised doubts about interest rate hikes by the Fed next year, as the tension between China and the USA continues ahead of the G20 meeting next week.

Soft US data also knocked the ‘Greenback’ earlier in the week when US durable goods orders for October saw a worse-than-expected drop to -4.4%, lower than the predicted drop to -2.6%.

With the US celebrating Thanksgiving yesterday, most American traders were off, meaning the Pound was able to push back and make gains on thin volumes.

GBP/USD Exchange Rate to Continue Pushing Back ahead of Brexit Meeting on Sunday

US Markit PMIs for November are set to be released later in the afternoon, and if the figures increase as expected the ‘Greenback’ may be able to claw back some of its losses made over Thursday’s session.

With the Brexit Summit fast approaching on Sunday, depending on the outcome, the UK currency could be set to continue to push back against USD and other major currencies.

Theresa May is set to head back to Brussels to meet Jean-Claude Junker on Saturday after EU negotiators meet on Friday, to agree on a text, although there is still fear that Spanish Prime Minister Pedro Sánchez will want to discuss it at the top level on Sunday due to the contentious issue of Gibraltar

The trade tensions between the US and China will also come back into focus as the G20 meeting next Friday.

US President Donald Trump claims he is ‘very prepared’ for the meeting with Chinese leader Xi Jinping and so we will get to see if a deal could be reached to end the trade spat.

Hannah Wilson

Contact Hannah Wilson