GBP/USD Continues its Descent despite Concerning US Employment Figures

GBP/USD Exchange Rate Slips as May Threatens MPs with ‘No-Deal’ Plan

UPDATE: GBP/USD has continued to weaken this afternoon despite the release of November’s continuing US jobless claims figures, which showed 1.710m against last month’s 1.660m – an unexpected turn of events for the US economy.

In Brexit news Theresa May threatened to initiate full planning for a ‘no-deal’ if MPs refused to back her withdrawal deal, saying:

‘The timetable is such that actually some people would need to take some practical steps in relation to no-deal if the Parliament were to vote down the deal on the 11th of December.’

Pound US Dollar (GBP/USD) Exchange Rate Down as BoE Releases Dire Predictions about ‘No-Deal’ Brexit

The Pound US Dollar (GBP/USD) exchange rate is down today, and is currently trading at US$1.28, after the Bank of England (BoE) released its sobering Brexit analysis yesterday.

BoE governor, Mark Carney, said of the report:

‘The impact of Brexit will depend on the direction . . . The direction of the effects of reduced openness is clear: lower supply capacity, weaker demand, a lower exchange rate and higher inflation.’

This has put pressure on Prime Minister Theresa May, who is seeking approval for her UK-EU withdrawal agreement.

The US Dollar (USD) was slightly dented following yesterday’s release of October’s new home sales, which printed at 0.544M against September’s 0.597M, showing a decrease in the US market conditions.

However, sturdy growth figures put USD back on track, with a finalised Q3 reading of 3.5% reassuring USD investors that the US economy is still exhibiting strong growth.

GBP/USD Sensitive to Brexit Doubts as Jo Johnson Mounts Attack on May’s Brexit Deal

The Pound (GBP) remains sensitive to any developments relating to Brexit, as Theresa May tries to convince Parliament to back her UK-EU Brexit deal.

However, MP Jo Johnson is to deliver a speech today, and is set to say:

‘The Conservative Party’s reputation for economic competence would be undermined by implementing a botched Brexit, especially one that the Government’s own analysis suggests will cause economic harm.’

Today’s release of October’s mortgage approvals showed an increase, with figures showing 67.086K against September’s 65.726K – a difference of 1.36K – bolstering investor confidence in Sterling.

USD/GBP Holds Up Despite Fed Comments

The US Dollar (USD) was undermined by a speech made by Chair of the Federal Reserve Jerome Powell yesterday, whose dovish comments indicated rate hikes are likely to slow down next year.

The USD/GBP exchange rate could show a rise later on from the release of some US consumer data, with the year-on-year Core Personal Consumption Expenditure figures expected to show a slight drop for October.

However, personal spending figures are expected to remain static for October, which shows that household expenditures are holding up ahead of the holiday period.

Today will also see the minutes being released from The Federal Open Market Committee meeting that will assess the US economic situation.

GBP/USD Outlook: Consumer Confidence and G20 in Focus

Tomorrow will see the release of the UK’s Gfk consumer confidence figures for November, which are expected to show a decrease on October’s -10.

Meanwhile the USD could be affected by the release of the Chicago PMI, which is set to remain generally bullish, although is forecast to drop from last month’s.

Saturday will also see US President Donald Trump discuss on-going trade tensions with the Chinese President Xi Jinping at the G20 summit in Buenos Aires, Argentina, with USD investors watching for any signs progress.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

Contact John Cameron