GBP/USD Exchange Rate Sinks as Americans Remain Confident in Economy
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate has dropped further over the course of today’s session, with inter-bank rates currently sat at $1.2732.
Brexit uncertainty has dented the Pound, as despite the US consumer confidence figures for November showing that confidence has fallen for the first time in five months – from 137.9 to 135.7 – the picture still remains positive for the USA.
Last month was an 18-year high for consumer confidence, although this slip is not necessarily a bad thing, with Americans still confident they can find a job as the unemployment rate is currently at a 48-year low and job openings are currently near record highs; they are just unsure their income will grow at a faster pace next year.
GBP/USD Drops Slightly as Positive US Activity Figures Emerge
UPDATE: The USD Chicago Fed National Activity Index showed a better-than-expected raise from 0.14 to 0.24 despite a predicted rise to only 0.18, causing a slight drop in the GBP/USD exchange rate.
The Democratic Unionist Party (DUP) have warned UK Prime Minister Theresa May that she should not rely on their support for the withdrawal agreement, which suggests that she may struggle to find the support, as more than 90 Tory MPs have publicly expressed disapproval of the deal.
GBP/USD Exchange Rate Fluctuates Amidst Brexit Pessimism and Trade Concerns
The Pound US Dollar Exchange Rate (GBP/USD) remained volatile over the past week as a mixture of US-China trade tensions and Brexit continued to cause instability.
UK Prime Minster Theresa May was able to get the EU Withdrawal Act passed by the European Commission, with a unanimous agreement despite the threat from Spain to vote against it if the issue of Gibraltar was not explicitly addressed.
In the end, the issue was resolved, with the Chief Minister of Gibraltar telling 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.’
While the withdrawal agreement may have been passed by the EU, the difficulties now lie in getting the deal passed through Parliament.
Theresa May faces a range of opposition to the deal, including from the Democratic Unionist Party (DUP), whose leader Arlene Foster stated that it ‘goes against everything’ her party has been promised.
Last week: GBP/USD Exchange Rate Strengthens as Weak Data from US
The tensions between the US and China ahead of the G20 Summit this week have caused anxieties in currency markets, which in turn raised doubts over whether the planned interest rate hikes by the US Federal Reserve would go ahead.
The soft US data seen last week also weakened the ‘Greenback’, especially the US durable goods figures, which plummeted to a worse-than-expected -4.4% despite a predicted fall of ‘only’ -2.6%.
The US Markit PMI figures released at the end of last week’s session furthermore saw a drop in the figures despite predicted growth, with the composite falling to 54.4 from a previous 54.9.
Pound traders saw Brexit take centre stage for the duration of last week’s session, with the speech on Tuesday by Bank of England (BoE) Governor, Mark Carney revealing that his organisation had been preparing for the possibility of a no-deal Brexit since June 2016.
GBP/USD Exchange Rate Forecast: Could there be Further Volatility as the G20 Summit Approaches?
Looking ahead to the remainder of this week’s session, the Pound US Dollar (GBP/USD) exchange rate is likely to face pressure as Brexit remains in the spotlight.
The focus of the G20 Summit in Argentina this week is likely to fall on the activities on the side-lines, with the hope that tensions between the US and China will cool, soothing down the trade spat between the two trade giants.
The main aim of Chinese leader Xi Jinping will be to get the United States to refrain from raising tariffs on Chinese products in January, despite the predictions that it is unlikely the US are going to let them slide.
The GBP/USD exchange rate could see a potential jump when the USD consumer confidence index for November is released on Tuesday, with a decrease forecast compared to last month.
That aside, focus is likely to remain on political events over the next week, with Brexit set to be the main driver for GBP/USD going forwards.