Pound to US Dollar Exchange Rate Advance Slows amid Brexit Delay Anticipation
UPDATE: Market uncertainty ahead of an expected Brexit delay announcement has kept the Pound Sterling to US Dollar (GBP/USD) exchange rate under pressure today.
The Pound’s appeal remained weak, as while a delay to the Brexit process was expected by markets the possibility of a no-deal outcome remains high.
On top of this, a long Brexit delay would still leave markets in uncertainty over Brexit for a long period of time.
The US Dollar (USD) avoided further losses against the Pound today thanks to some better than expected US business optimism data from NFIB
Pound to US Dollar Exchange Rate Gains Limited by Brexit Jitters and US Data
UPDATE: Despite the latest US data coming in slightly higher than expected, the Pound Sterling to US Dollar (GBP/USD) exchange rate continued to edge higher on Monday afternoon.
Investors remained hesitant to buy the Pound (GBP) ahead of a week of Brexit uncertainty, but the US Dollar was weak as investors sold it from its weekend highs.
The US Dollar’s (USD) trajectory was largely unchanged following the publication of the latest US factory orders data.
The data printed at a slightly higher than expected -0.5%, but the previous figure was revised lower from 0.1% to a stagnant 0.0%.
Pound to US Dollar (GBP/USD) Exchange Rate Rebounds despite Brexit Uncertainties
Towards the end of last week, a combination of fresh no-deal Brexit fears and a stronger-than-expected US Non-Farm Payroll report sent the Pound Sterling to US Dollar (GBP/USD) exchange rate tumbling. These factors are limiting this morning’s potential gains.
Last week GBP/USD open the week at the interbank level of 1.30, and despite a jump in demand taking the pair over a cent higher to the week’s best level, the pair ultimately closed the week down.
This morning has seen the pair rebound just slightly following Friday’s US Dollar (USD) surge and Pound (GBP) slump, but gains have been modest.
Investors are hesitant to move too much ahead of what is likely to be a highly major week for the Brexit process.
As the US Dollar (USD) is a safe haven currency, GBP/USD could fall even further if Brexit uncertainties worsen.
Pound (GBP) Exchange Rate Strength Limited as Investors Anticipate Brexit Developments
As this week’s Brexit date approaches without any solid confirmation over whether the process will be delayed again or not, the Pound (GBP) has seen highly volatile movement over the past week.
For the first half of last week, the Pound saw stronger demand as investors digested news that UK Prime Minister Theresa May would hold Brexit talks with opposition Leader Jeremy Corbyn.
The talks are ongoing, and have slightly bolstered hopes among investors that the Brexit process can end with a softer deal.
At the end of the week though, concerns that the talks will remain deadlocked, combined with the fact that the Brexit date was now under a week away, put fresh pressure on the Pound.
Amid fears that the UK will end in a no-deal scenario, the Pound’s gains were limited versus a slipping US Dollar (USD) this morning.
US Dollar (USD) Exchange Rates Slip Back from Highs Following Friday Jump
For most of last week the US Dollar (USD) saw limited movement, as the latest US data was largely mixed and indicated that the economy was being hit by slowing global growth.
This made investors more confident that the Federal Reserve was right to take a more cautious tone on monetary policy, and this kept pressure on US Dollar demand.
However, at the end of the week USD was able to capitalise on a weaker Pound, as the latest Non-Farm Payroll results came in above expectations.
As a key indicator of economic health, news that the number of new jobs in March was higher than expected bolstered demand for the US currency. To some, it was reason to believe the Fed could avoid taking a more dovish tone.
However, when markets opened this week the US Dollar slipped slightly from its Friday highs in profit-taking. On top of this, Friday’s US wage stats falling short of expectations indicated that the US economic outlook was still mixed.
Pound to US Dollar (GBP/USD) Exchange Rate Focused on Brexit Delay and US Inflation
Wednesday’s session is likely to be highly influential for the Pound to US Dollar (GBP/USD) exchange rate, so unless there are major Brexit developments in the coming sessions the pair’s movement may be limited until then.
As talks between UK Prime Minister Theresa May and opposition Leader Jeremy Corbyn continue over a potentially softer Brexit deal, it is still uncertain if Brexit will take place this Friday or if another delay to the process will be agreed.
The UK is set to meet with the EU at a summit on Wednesday, and analysts predict this is when a delay will hopefully be confirmed.
This, of course, leaves the threats of a no-deal Brexit very close and this is likely to limit the Pound’s (GBP) potential for gains until then.
Wednesday will be a key session for the US Dollar (USD) as well though, as the week’s most influential US news will be published during the American session.
US inflation from March could influence Federal Reserve interest rate hike bets if they surprise investors, and the Fed’s latest meeting minutes data due in the evening may of course prove influential for the Pound to US Dollar (GBP/USD) exchange rate as well.