Pound Sterling US Dollar (GBP/USD) Exchange Rate Rises as Tory Candidates Back Boris’ Deal
The Pound Sterling US Dollar (GBP/USD) exchange rate rallied to a 17-day high, leaving the pairing trading at around $1.2965.
At the start of the week, the Pound edged up against the Dollar after current Prime Minister Boris Johnson announced all Conservative Party candidates standing in the election backed his Brexit agreement.
This sparked an upswing in optimism as this will likely increase the chances of Johnson’s deal getting through parliament.
This added to last week’s boost of election optimism after Brexit Party Leader, Nigel Farage announced the party had stepped down in further seats.
It was reported by the Telegraph that party members stood down in 43 non-Conservative seats, 11 of which are held by Labour and 17 that saw the Tories finish second in the 2017 election.
However, it may be likely that these gains will be limited as election optimism is distracting from wider market pessimism about the long-term outlook for the currency.
Last week’s slew of weak data and the issue that the Prime Minister will only have 11 months to negotiate a trade deal with the EU weighed on market optimism.
US Dollar (USD) Slides as Markets Await US-China Trade Progress
The US Dollar slumped against the Pound at the start of the week despite a slight upswing in US-China trade optimism.
On Sunday, optimism increased after a report from Chinese state news wire, Xinhua stated that over the weekend Washington and Beijing held ‘constructive talks’.
Added to this, the news outlet also reported that Chinese Vice Premier Liu He held a phone call with US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer about a ‘Phase One’ trade deal.
Commenting on this, Chief Strategist at FX analysis firm, ACLS Global, Marshall Gittler said:
‘It all sounds promising. But China has made rolling back some of the tariffs a precondition for the agreement and it’s not clear whether Trump will agree to that […] so net-net, it’s still up in the air.’
However, the ‘Greenback’ was left under pressure as markets awaited further news on US-China relations, and whether or not a preliminary trade deal is in sight.
Pound US Dollar Outlook: Will GBP Extend Today’s Gains?
Looking ahead to this afternoon, the US Dollar (USD) could edge up against the Pound (GBP) following the release of the US NAHB Housing Market Index.
If November’s index remains at its highest reading since February 2018, it could provide the ‘Greenback’ with an upswing of support.
Meanwhile, Sterling is likely to be left under pressure as the 12th December election gets closer.
If reports suggest the Labour Party are creeping closer to the Conservative Party in the polls, it is likely the Pound US Dollar (GBP/USD) exchange rate will fall.