Pound to US Dollar Exchange Rate Knocked from Weekly Best by Doubts of Brexit Bill’s Popularity
After surging on Monday and recovering most of last week’s steep losses, the Pound Sterling to US Dollar (GBP/USD) exchange rate slipped this morning in reaction to some fresh Brexit uncertainty and some mixed UK ecostats.
GBP/USD spent most of last week tumbling, shedding around a cent after opening the week at 1.3209 and closing the week at the level of 1.3017.
On Monday alone, GBP/USD essentially recouped those losses and briefly touched a high of 1.3252 overnight, before steadying closer to the level of 1.3190 again at the time of writing.
Investors were hesitant to buy the Pound (GBP) too much, amid signs that despite yesterday’s Brexit developments there was not enough domestic support for the government’s Brexit plan to pass.
Pound (GBP) Exchange Rates Slip amid Doubts that Brexit Bill Change is Enough to Pass
Last night, UK Prime Minister Theresa May hurried to Strasbourg for last-minute negotiations with European Commission President Jean-Claude Juncker.
The two parties agreed to new wording of the Brexit deal, emphasising that the Irish backstop was intended to be a temporary measure.
This news caused a surge in Pound demand yesterday and overnight, as investors hoped it would be enough to make the Brexit deal popular enough domestically to pass, and for a soft Brexit to be confirmed.
However, the Pound slipped from its weekly highs today, ahead of Parliament’s anticipated meaningful vote on the Brexit plan, amid signs that the changes may not be enough after all.
As lawmakers parsed over the reworded deal, doubts emerged that it would be enough to push the deal over the line.
On top of this, this morning’s UK growth data indicated that while growth had rebounded strongly in January, poor growth towards the end of 2018 meant that the economic grew at only 0.2% in the three months into January.
US Dollar (USD) Exchange Rates Struggle to Recover amid Mixed US Data
While investors sold the Pound from its overnight highs this morning, the US Dollar (USD) was unable to capitalise on Sterling’s weakness due to its own limited strength this week so far.
Since US Non-Farm Payroll stats fell well short of expectations at the end of last week, investors have been hesitant to keep buying the resilient US currency.
Investors seeking safe havens have been opting for US Dollar rivals like the Japanese Yen (JPY), amid speculation that the US economic outlook may have been hit by slowing global growth.
Yesterday’s US retail sales results saw December’s already disappointing retail data revised even lower, which left additional pressure on the US currency during today’s session.
Pound to US Dollar (GBP/USD) Exchange Rate Outlook Could Change on Today’s Brexit News
The Pound to US Dollar exchange rate has already been highly volatile on Brexit uncertainties and developments already this week – and it’s still only Tuesday morning.
With the biggest Brexit news of the week expected over the coming days, GBP/USD could be in for even sharper movements very soon.
The big focus for Pound investors will be UK Parliament’s meaningful votes on the government’s Brexit agreement.
The main vote on the agreement is due to be held today. If the government’s Brexit deal is able to pass through Parliament, a soft Brexit will have been essentially confirmed and the Pound will surge.
Analysts believe the latest Brexit assurances won’t be enough though, and if the deal is blocked again then Parliament will hold votes on a no-deal Brexit and a delay to the Brexit process in the coming days.
This could lead the Brexit outlook to be notably different by the end of the week, and is therefore likely to be the biggest major influence of GBP/USD movement.
Still, the US Dollar is more likely to hold its ground versus a volatile Pound if upcoming US data impresses investors.
This afternoon’s US inflation rate data, as well as durable goods stats due tomorrow, could also influence movement in the Pound to US Dollar (GBP/USD) exchange rate.