Pound to US Dollar Exchange Rate Slips Following Overnight Rebound
The Pound to US Dollar (GBP/USD) exchange rate has been fluctuating for most of the week so far, as no-deal Brexit fears pressure the Pound (GBP) while the US Dollar (USD) is weighed by anticipation for upcoming Federal Reserve news.
Following last week’s impressive gain from near a decade low of 1.2022 to 1.2150, GBP/USD has not moved too far from this week’s opening levels.
Still, GBP/USD has seen relatively broad fluctuations of over a cent, trending between lows of 1.2071 and highs of 1.2174. At the time of writing, the pair was trending closely to the week’s opening levels.
This volatile movement could continue until more major Brexit or Federal Reserve news inspires a shift in direction.
Pound (GBP) Exchange Rates Lacking Support amid Fresh No-Deal Brexit Fears
Last week’s Pound rally quickly ran out of steam this week. Britain’s opposition parties have indicated no progress in plans to prevent a no-deal Brexit, while UK Prime Minister Boris Johnson has caused no-deal Brexit fears to flare up again.
Johnson continues to tell EU officials that he will not accept an agreement that includes the controversial Irish backstop, while the EU has maintained that the backstop is central to any agreement deal.
EU officials, such as European Council President Donald Tusk, said that Johnson’s government was not providing any workable alternatives. He said in a tweet:
‘Those against the backstop and not proposing realistic alternatives in fact support re-establishing a border. Even if they do not admit it’
The Pound fell on the fresh UK-EU tensions, and expectations for any optimistic developments in the coming days are low.
US Dollar (USD) Exchange Rates Mixed as Investors Await Central Bank News
Recent weeks have seen fears worsen that the US economy could be hit by a US-China trade war. US recession fears and Federal Reserve interest rate cut bets have also risen and US data has painted a mixed picture for the US outlook.
Amid concerns about the US economic outlook, investors have been hesitant to buy the US Dollar even on safe haven demand.
The uncertainty about the US outlook is also making markets even more heavily anticipate the Federal Reserve news expected this week.
The Federal Reserve has been fairly optimistic in recent sessions, but analysts believe trade war and recession fears could pressure the bank into a more dovish stance.
Pound to US Dollar (GBP/USD) Exchange Rate Anticipates Jackson Hole Symposium
Amid a lack of notable UK ecostats due for publication, and the Brexit process unlikely to see many notable developments, the Pound to US Dollar (GBP/USD) exchange rate will be driven more by central bank news towards the end of the week.
The Federal Reserve’s latest meeting minutes report will be published this evening and will give investors a better idea of the tone the bank took in its most recent policy decision.
However, in terms of reaction to recent rising US-China trade war and recession fears, investors will be even more hotly anticipating fresh comments from bank officials at the Jackson Hole Symposium.
The Central Bank Symposium at Jackson Hole will take place towards the end of the week. Pound to US Dollar (GBP/USD) exchange rate investors will be watching for comments on the US and global economic outlooks from Fed Chairman Jerome Powell especially closely.