Pound US Dollar Exchange Rate Steady, US Markets Await Signs of a US-China Trade Deal

GBP/USD Exchange Rate Rangebound, US-China Trade Talks in Focus

The Pound US Dollar (GBP/USD) exchange rate held steady this morning, with the pairing currently trading around $1.293 as US markets remain on the lookout for signs of a US-China Phase One Trade deal.

Stephen Innes, a Strategist at Axitrader, comments:

‘We are still not 100% clear if the ‘phase one’ deal will go through or not, it has not been signed yet.

‘We then pivot to ‘phase two’….that suggests you need some gold, because we don’t know what the next phase is all about, how contentious of a deal that is going to be.’

Yesterday saw US Dollar investors become more hopeful on a US-China trade deal after China announced plans to cut tariffs on 850 products, fuelling a Christmas share rally as waning trade tensions uplifting the ‘Greenback’.

Meanwhile, today saw the US Dollar stabilises as there is still no sign of any deal being struck between Washington and Beijing. Any further signs of a de-escalation of tensions between the two superpowers would boost the US Dollar ahead of the New Year.

GBP/USD Exchange Rate Holds Steady as UK Brexit Outlook Dims

The Pound (GBP) stabilised against the US Dollar (USD) this morning as Sterling investors continue to digest implications around Brexit following Prime Minister Boris Johnson’s recent success with passing his newly-amended Withdrawal Agreement Bill through Parliament.

George Brown, an analyst at Investec, commented:

‘A no-deal Brexit could still manifest itself as soon as the end of next year, whereas a re-escalation in the US-China trade dispute cannot be ruled out.’

Meanwhile, Howard Archer, the Chief UK Economic Adviser at EY Item Club, said that Brexit will continue to dominate 2020 and could force the Bank of England (BoE) to take action to encourage the flagging British economy.

Mr Archer added:

‘Pressure for lower interest rates could also mount if the economy continues to be hampered by concerns over the UK’s longer-term relationship with the EU and what will happen at the end of 2020 when the transition arrangement will be due to end.’

GBP/USD Outlook: US-China Trade Developments and Brexit in Focus for 2020

US-China trade developments will continue to drive the GBP/USD exchange rate into the coming year, with any signs of easing tensions between the world’s two largest economies likely temporarily weakening the ‘Greenback’ as traders flock to riskier assets.

Meanwhile, the Pound (GBP) will be directed by further Brexit developments ahead of the 31st January deadline in which the UK is expected to leave the EU and enter its ‘transition period’.

David Moore

Contact David Moore