GBP/USD Exchange Rate Steady Following Trump’s Combative State of the Union Address
The Pound Sterling to US Dollar (GBP/USD) exchange rate is rangebound this morning as markets reflect on US President Donald Trump’s State of the Union speech.
At the time of writing the GBP/USD exchange rate is muted this morning, as the pairing holds its ground after plummeting over half a cent on Tuesday.
Pound US Dollar (GBP/USD) Exchange Rates Muted Following Trump’s State of the Union Address
The Pound (GBP) is stuck trading in a narrow range against the US Dollar (USD) this morning as markets digest President Trump’s State of the Union address.
After delaying the address due to the partial government shutdown, Trump made an appeal for unity as he spoke to a newly divided Congress, while again outlining his case for a wall along the Mexico border yet offering no new solution as to how to solve the dispute over funding.
This was seen as a sign by many that the US government could be facing a shutdown again next week, unnerving some USD investors.
However it was the President’s comments regarding China that appeared to be the main focus for markets, with the US Dollar stuttering as Trump again lashed out at China’s ‘unfair trade practises’ and urged Beijing to help shrink the ‘chronic’ US deficit and protect US jobs.
This renewed concerns that the US and China will be unable to resolve their trade dispute by the end of February, at which time fresh US tariffs are scheduled to kick in against China.
GBP/USD Exchange Rate Forecast: Brexit to Dampen BoE Outlook?
Looking to the second half of the week, the Pound US Dollar (GBP/USD) exchange rate could come under fire on Thursday as the Bank of England (BoE) concludes its first policy meeting of 2019.
While no policy changes are expected from the BoE this month, GBP investors will be eager to hear the bank’s current take on Brexit and warning signs on global growth.
This could lead the bank to adopt a dovish tone in its forward guidance for the coming year, with some analysts forecasting that the BoE could seek to delay its next rate hike until 2020 at the earliest.
On top of this Theresa May will also travel to Brussels tomorrow to meet with European Commission President Jean-Claude Juncker in an attempt to negotiate an ‘alternative’ to the backstop agreement.
This may lead to Sterling coming under further pressure if the EU remains staunch in its refusal to renegotiate the withdrawal agreement as it increases the risk of a no-deal Brexit if May returns empty handed.
In the meantime the US will publish its latest trade balance figures later this afternoon, potentially lending some modest support to the US Dollar if the national trade deficit narrowed in November as forecast.