GBP/USD Exchange Rate Subdued amid On-Going Brexit Woes

GBP/USD Exchange Rate Rangebound amid Brexit Issues 

The Pound to US Dollar (GBP/USD) exchange rate has seen minimal movement so far today as UK-EU talks remain in focus for GBP investors. 

At the time of writing, the GBP/USD exchange rate is trading at around $1.3369, virtually unchanged from this morning’s opening levels. 

Pound (GBP) Directionless as Northern Ireland Protocol Negotiations Continue 

The Pound (GBP) is muted against many of its peers this morning in response to the on-going difficulties between the UK and the EU.  

Despite the extended grace period for drugs imported from the UK into NI, medicine is a pressing issue for the Brexit negotiations as there will be trade disturbance between the UK and EU should a decision not be made by the end of January. 

The international trade secretary, Anne-Marie Trevelyan, signalled a softening approach from the UK government on Tuesday. Trevelyan declared that the UK Government would ‘absolutely not’ trigger Article 16; this will hopefully deter further injury to the two nations’ future relationship.  

Should Article 16 be triggered, then a trade-war is expected to occur. This would negatively impact GBP as the economy recovers slowly in this post-pandemic climate.  

Maroš Šefčovič, Vice President of the European Commission for Interinstitutional Relations and Foresight, said: 

‘I think that if there was the clear political will from the U.K. side these … problems could be solved. 

‘But looking at how far we progressed over the last four weeks, the level of detail our U.K. partners want to discuss, I know that we will probably not be able to resolve everything before the end of the year.’ 

US Dollar (USD) Subdued ahead of US Data Dump 

At the same time this morning, the US Dollar is trading in a narrow-range as USD investors await the release of new data. 

The latest US GDP estimate is confirm growth slowed to 5.7% from 6.2% in the third quarter, meanwhile last week’s initial jobless claims are forecast to drop to 260K from 268K.  

Furthermore, USD investors are betting the Fed could accelerate its current tightening cycle following the reappointment of Jerome Powell as Federal Reserve’s Chairman.  

Meanwhile, US President Joe Biden, remains confident that, despite inflation rates, the economy is strong.  

US President, Joe Biden, said: 

‘It’s important to maintain perspective about where our economy stands today. The fact is, America has a lot to be proud of.  

We’re experiencing the strongest economic recovery in the world. Even after accounting for inflation, our economy is bigger, and our families have more money in their pockets than they did before the pandemic.’ 

The safe-haven USD is likely to witness market movement this afternoon in response to further data release.  

GBP/USD Exchange Rate Forecast: USD to be Influenced Slew of Data 

Looking ahead, GBP/USD exchange rates are likely to be driven by the publication of a number of notable US data releases later this afternoon.  

The ‘Greenbank’ is likely to be affected by the mass of notable data expected to be printed later today. Durable goods orders are expected to report a rebound in order growth last month, while Personal Income is forecast to rise 0.2% in October, an increase from the previous -1%.  

Meanwhile, GBP is lacking in notable data due to released today. However, November’s CBI Industrial Trends Order is forecast to increase to 13, up from the previous month’s 9. 

Bethany Uren

Contact Bethany Uren