GBP/USD Exchange Rate Accelerates as PM Heads to Brussels
The Pound Sterling to US Dollar (GBP/USD) exchange rate drifted higher at the start of this week’s session as Prime Minister Theresa May headed to Brussels for further Brexit talks.
At the time of writing the GBP/USD exchange rate has risen roughly 0.3% so far today, lifting the pairing to around $1.2935.
Pound (GBP) Buoyed as Theresa May Returns to Brussels
The Pound (GBP) drifted higher against the US Dollar (USD) and some of its other peers at the start of this week’s session as Theresa May heads back to Brussels for the latest round of Brexit talks.
This support for Sterling appeared to be driven by hopes that the PM may be able to win some concessions from the EU over the withdrawal deal.
This comes after the Irish foreign minister was reported to have said that the EU would be willing to offer a ‘package’ to the UK if order to help get the withdrawal deal past the finishing line.
However it remains to be seen if this will be enough to convince the House of Commons, with many MPs adamant that they will not accept the deal unless an ‘alternative’ is found to the backstop.
US Dollar (USD) Softens Amid Fallout Over Trump’s Wall
Meanwhile the US Dollar (USD) is following a bearish path at the start of this week’s session as the fallout from Donald Trump’s deflation of a state of emergency on Friday continues to drag on the currency.
President Trump shocked markets at the end of last week as he declared the emergency in an effort to circumvent Congress and divert funds towards his controversial border wall with Mexico.
The unprecedented move has unsurprisingly been condemned by Democrats and his critics and has further widened the political divide in Washington.
This is expected to result in some heated legal challenges from those who oppose Trump’s move and could limit the appeal of the US Dollar.
GBP/USD Exchange Rate Forecast: Surging UK Wage Growth to Turbo Charge Sterling?
Looking ahead, the Pound US Dollar (GBP/USD) exchange rate looks poised to rally on Tuesday as the UK publishes its latest jobs report.
Economists forecast that the report will show that domestic unemployment held at a 43-year low of 4% in December.
However it’s likely to be the accompanying earning figures that will be the centre of attention tomorrow as wage growth is expected to have accelerated to a new decade high of 3.5% at the end of 2018.
The figures are likely to reflect well on Sterling as the continue uptrend in wage growth may leave the door open for a potential rate hike from the Bank of England (BoE) once Brexit is resolved.
Meanwhile the focus for USD investors this week will likely be on the release of the minutes from the Federal Reserve’s policy meeting earlier in the month, with a dovish outlook from policymakers likely to dampen the appeal of the US Dollar.