GBP/USD Exchange Rate Skyrockets on Reports of Progress on Brexit Deal
The Pound Sterling to US Dollar (GBP/USD) exchange rate is roaring higher this morning, on the back of growing optimism that the a breakthrough in Brexit talks may be close.
At the time of writing the GBP/USD exchange rate is trading at around $1.2449, up almost 1% from this morning’s opening levels and striking a fresh two-month high.
Brexit Optimism Turbo Charges the Pound (GBP)
The Pound (GBP) is racing higher against the US Dollar (USD) and the majority of its other peers this morning, in response to renewed optimism on Brexit.
There is growing consensus both that the UK and EU may be close to a breakthrough in Brexit talks.
The Times reported on Friday that the Democratic Unionist Party (DUP) may be open to a ‘Northern Ireland only backstop’, which would see Northern Ireland continue to abide by some EU rules post Brexit.
— The Times Scotland (@thetimesscot) September 12, 2019
In exchange Brussels would drop its insistence that Northern Ireland remain within a customs union with the EU, potentially allowing the two sides to finally get a deal across the line.
DUP leader Arlene Foster has been quick to refute the claims however, stating:
‘The UK must leave as one nation. We are keen to see a sensible deal but not one that divides the internal market of the UK. We will not support any arrangements that create a barrier to East West trade. Anonymous sources lead to nonsense stories.’
However this appears to have done little to sour sentiment towards Sterling this morning, which may have to do with rumours that the EU may be willing to grant another extension to Brexit and that Boris Johnson is being urged by Cabinet allies to ask for Brexit extension rather than disobey a law recently passed by Parliament.
GBP/USD Exchange Rate Forecast: Will Slowing US Retail Sales Growth Dent the US Dollar?
Still to come today will be the publication of the latest US retail sales figures, which could help to extend this morning’s upswing in the Pound US Dollar (GBP/USD) exchange rate.
Coming less than a week before the Federal Reserve’s latest rate decision, economists forecast today’s data will reveal sales growth slowed to 0.2% last month after a robust 0.7% expansion in July.
This would be the lowest paces of sales growth since February and would add to speculation that the US economy is slowing.
Also on the docket this afternoon is the University of Michigan’s preliminary Consumer Sentiment Index for September, which is expected to remain gloomy following a sharp drop in sentiment last month.
Meanwhile for GBP investors, the focus will now turn to next week’s session, where political headlines may continue to act as the main catalyst of movement in the Pound.
Also of note nest week will be the Bank of England’s (BoE) latest policy meeting.
While no policy changes are expected from the BoE this month, we could see the bank’s economic outlook influence Sterling sentiment on Thursday.