The GBP USD exchange rate slid to its lowest levels since the Flash Crash this morning as comments made by Theresa May on leaving the EU continue to bludgeon the Pound.
Pound US Dollar (GBP USD) Pressured by PM Interview
The Pound US Dollar (GBP USD) exchange rate continues to feel the drag of Prime Minister Theresa May’s Brexit comments in an interview on Sunday, in which she appeared to indicate that the UK government would be pursuing a ‘hard Brexit’.
May said that the government would not be looking to ‘keep bits of EU membership’, which investors have widely interpreted to mean that the PM would not be seeking to remain part of the single market.
The Prime Minister attempted to alleviate market concerns yesterday as she said;
‘I’m tempted to say the people who are getting it wrong are those who print things saying I’m talking about a hard Brexit, [that] it’s absolutely inevitable it’s a hard Brexit. I don’t accept the terms hard or soft Brexit.‘
However with the government’s ‘Brexit’ plans still yet to be published, the words largely fell on deaf ears as traders continued to speculate over what impact leaving the EU will have on the UK economy.
Trump Uncertainty Weighs on US Dollar
The rising uncertainty around president-elect Donald Trump tempered the US Dollar’s advance somewhat this morning however as his continued praise of Russian President Vladimir Putin and apparent willingness to ignore the One China Policy in dealing with Taiwan could signal a dramatic change in US foreign policy under his presidency.
Markets are also concerned about a backlash to his criticism of businesses on Twitter as he continues to chastise companies for not investing more in their US operations, with a recent tweet forcing Ford to abandon plans to build a new factory in Mexico.
GBP USD Exchange Rate Forecast: UK Production Figures Ahead
The GBP USD exchange rate may rally on Wednesday with the release of the UK’s latest Production Report. Figures are expected to rise across the UK’s Manufacturing, Construction and Industrial sectors after a notable rise in last week’s PMI readings.
Looking into the next few weeks the Pound is likely to slump further as formal ‘Brexit’ negotiations are expected get underway in March. Meanwhile, movement in the US Dollar may be muted ahead of Trump’s inauguration later this month as markets wait for more information about his policy plans.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.21 and the USD GBP exchange rate was trending around 0.82.