GBP/USD Exchange Rate Muted as Labour Attempts to Prevent No-Deal Brexit

Pound US Dollar (GBP/USD) Exchange Rate Flat Ahead of Debate on Prevention of a No-Deal Brexit

UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.2738.

Later today the Labour Party is set to debate a motion that will give MPs the chance to introduce legislation to prevent a no-deal Brexit.

This provided Sterling with a slight upswing of support as investors continue to worry about who will replace Theresa May as Prime Minister.

Frontrunner and Eurosceptic, Boris Johnson has said he would be willing to take the UK out of the European Union on 31 October deal or no-deal.

However, the motion due to be debated today did little to buoy Sterling ahead of the ‘Greenback’ on Wednesday.

Pound US Dollar (GBP/USD) Exchange Rate Muted as US PPI Puts in Solid Increase

UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.2709.

On Tuesday afternoon, the annualised US Producer Price Index (PPI) excluding food and energy rose by 2.3% in April.

Month-on-month prices rose by 0.2% which likely provided the ‘Greenback’ with an upswing of support.

This was the second consecutive month that PPI increased solidly, boosted by a jump in the cost of hotel prices.

This suggests that there is a steady pickup in underlying inflation pressures and could support the Federal Reserve’s belief that weak inflation readings are likely transitory.

Pound US Dollar (GBP/USD) Exchange Rate Edges Up as UK Wages Rise

UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate rose and the pairing is currently trading at an inter-bank rate of $1.2718.

Data showed that wage growth beat market expectations in the three months to April which likely buoyed Sterling.

Average earnings excluding bonuses edged up to a higher-than-expected 3.4% compared to April 2018.

While wages grew at a faster rate than inflation, TUC is concerned that wages are not rising at a fast enough rate.

Commenting on this, union chief Frances O’Grady – the TUC General Secretary – saw the figures in a negative light, saying:

‘Wage growth is still stuck in the slow lane. Real pay is still lower than it was before the 2008 crisis and this rate of growth won’t restore decent living standards.

‘We need to speed things up. The government must raise the minimum wage to £10 as quickly as possible and take action to strengthen the economy, including by embedding real pay rises across the whole of the public sector.’

Pound US Dollar (GBP/USD) Exchange Rate Rises as UK Employment hits Record High

The Pound Sterling US Dollar (GBP/USD) exchange rate rose this morning and the pairing is currently trading at an inter-bank rate of $1.2718.

On Tuesday, data revealed that the UK economy continued to create new jobs, with unemployment remaining at a 44-year low.

Unemployment remained steady at 3.8%, despite forecasts predicting it would edge up to 3.9%.

The data released by the Office for National Statistics (ONS) revealed that the number of people in employment was at a record high of 32.75 million.

In the three months to April, 32,000 jobs were created, although compared to the previous quarter, when 99,000 jobs were created, this could be considered a slowdown.

US Dollar (USD) Exchange Rates Flat as China says it is ‘Not Afraid’ of Fighting Trade War

On Tuesday, China’s Foreign Ministry said that the Chinese government would respond if the US insists on escalating the current trade tensions.

Chinese Foreign Ministry Spokesman, Geng Shuang said:

‘China does not want to fight a trade war, but we are not afraid of fighting a trade war.

‘If the United States only wants to escalate trade frictions, we will resolutely respond and fight to the end.’

This comes after US President Donald Trump declared he would slap further tariffs on Chinese imports ‘immediately’ if leader Xi Jinping did not meet him at the G20 summit later this month.

He told reporters he could impose tariffs of 25% or higher on the $300 billion worth of Chinese goods unaffected by current tariffs.

However, thanks to better-than-forecast UK data, this did little to affect the GBP/USD exchange rate.

Japanese Semiconductor Dumps Chinese Companies Blacklisted by Washington

Meanwhile, reports revealed that the world’s third largest supplier of semiconductor manufacturing equipment, Japan’s Tokyo Electron, will not supply Chinese companies blacklisted by the US.

An anonymous executive at the firm, referring to the top US chip equipment firms, stated:

‘We would not do business with Chinese clients with whom Applied Materials and Lam Research are barred from doing businesses.

‘It is crucial for us that the US government and industry see us as a fair company.’

The move will likely increase trade tensions between the US and China, potentially impacting the GBP/USD exchange rate is global risk sentiment is damaged.

Pound US Dollar (GBP/USD) Exchange Rate Outlook: Will Stronger Inflation Buoy USD?

Looking ahead to this afternoon, the US Dollar (USD) could slide against the Pound (GBP) following the release of the latest US Producer Price Index (PPI).

If the PPI does not rise as high as forecast, it could dampen sentiment in the ‘Greenback’.

Meanwhile, on Thursday USD could rise following the release of the US Consumer Price Index (CPI).

If inflation rises higher than expected it could cause the Pound US Dollar (GBP/USD) exchange rate to slip.

Millie Empson

Contact Millie Empson