GBP/USD Exchange Rate Sinks as May’s Leadership is Increasingly Challenged
UPDATE: The Pound US Dollar exchange rate is down and is currently trading around $1.280, after Boris Johnson, the former Foreign Secretary, said he was hoping to run for leadership of the Conservative Party.
Meanwhile, the US Dollar benefited from the improved US continuing jobless claims for May, which came in better than forecast at 1.660M.
These were followed by the US Philadelphia Fed Manufacturing Survey figures for May, which improved on the consensus 9.0 and came in at 16.6.
Sterling, meanwhile, has been dragged down by heightened Brexit concerns, with Theresa May’s leadership being called into question, and a lack of any signs of a cross-party consensus emerging on the withdrawal deal.
Pound US Dollar (GBP/USD) Exchange Rate Falls despite Rising US-China Trade Tensions
The Pound US Dollar (GBP/USD) exchange rate is down today and is currently trading around $1.2831 on the inter-bank market.
The US Dollar (USD) has gained against the Pound (GBP) despite President Donald Trump’s declaration of a national emergency regarding the Chinese tech giant Huawei over fears of a threat to national security.
This move has further exacerbated tensions between the two superpowers, following on from the hike on tariffs this week.
Huawei hit back at the US in a statement, which said:
‘Instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.’
The Pound, meanwhile, has struggled following Theresa May’s announcement that she would go ahead with another vote on her Brexit withdrawal agreement.
This has proved a drag on market confidence in Sterling, with no-deal fears increasing ahead of June’s vote.
USD/GBP Exchange Rate Edges Higher as US Traders Await Housing Starts Figures
US Dollar (USD) traders will be awaiting the publication of the US housing starts figures for April lter today, with any signs of an increase likely to benefit the ‘Greenback’.
These will be followed by the US initial jobless claims figures for May, which are expected to ease to 220K against April’s 228K.
The ongoing trade disputes between the US and China have weighed on market confidence in the US economy.
Michelle Meyer, Chief US Economist at the Bank of America Merrill Lynch commented:
‘I think the chances the Fed will have to cut rates before the end of the year have clearly increased, given the trade war scenario. It’s still not my baseline. I think the Fed has to be careful in responding to the current trade tensions. It’s not obvious how persistent it will be, and how it will play out in the real economy.’
GBP/USD Exchange Rate Falls as May’s Leadership is Challenged by 1922 Committee
Today will see Theresa May face the 1922 Committee executive, a group of influential Tory backbenchers, who will ask her to outline her plans should she fail to gain parliamentary support for her Brexit deal.
Brexiteer Tory MP Mark Francois has also predicted poor performance for his party in the upcoming European Elections, further putting pressure on May’s leadership.
Mr Francois said:
‘As the polls increasingly suggest, we are going to have an extremely difficult night in the European elections.’
Cross-party talks are also proving fruitless, with the shadow Business Secretary, Rebecca Long-Baily, saying that the Conservatives are refusing to compromise on the customs union issue, stating:
‘In terms of the customs union, we’ve been repeatedly pushing them on this point, and they haven’t reached the position that we would like them to get to by any stretch at the moment.’
GBP/USD Forecast: Sterling Could Weaken on Lack of Parliamentary Brexit Support
‘Greenback’ traders will be looking ahead to tomorrow’s publication of the flash US Michigan Consumer Sentiment Index for May, which is expected to increase.
Tomorrow will also see a speech by the Vice Chairman of the Board of Governors at the Federal Reserve, Richard Clarida, with any dovish comments about the US economy liable to weaken the USD/GBP exchange rate.
The GBP/USD exchange rate will likely be dictated by Brexit developments into next week.
Any signs of flagging support for Theresa May’s withdrawal deal from Parliament could weaken the pairing further on heightened fears of a no-deal between the UK and EU.