GBP/USD Exchange Rate Rangebound as No.10 Questioned
The Pound US Dollar (GBP/USD) exchange rate is trading flat during today’s session as UK Prime Minister Boris Johnson is under pressure.
At the time of writing, the GBP/USD exchange rate is trading at approximately $1.3628 with minimal market movement.
Pound (GBP) Muted as UK Prime Minister Scrutinised for Lockdown Misconduct
The Pound (GBP) is trading in a narrow range this morning as the UK Prime Minister, Boris Johnson, comes under fire for flouting 2020’s lockdown rules.
Johnson is feeling the pressure from both conservative and opposition MP’s to announce whether rules were broken in the form of garden drinks with 30 individuals at the beginning of the first lockdown.
During this time, large outdoor gatherings were banned in England.
Former senior civil servant, Sir David Normington, said:
‘It’s a terrible misjudgement, brings disrepute on the civil service. This isn’t just about the responsibilities of PMs and politicians, it’s also about the behaviour and responsibilities of senior civil servants. That’s a very serious matter.’
However, Johnson has refused to comment whether he was in attendance of the garden party and believes it to be a case for Sue Gray – the senior civil serval in charge of investigating the incident.
Angela Rayner, Labour’s deputy leader, has said that Johnson’s position is ‘untenable’ if it is proven that he not only broke the law, but also lied to the general public about his actions.
This is weighing on Sterling’s appeal as it casts uncertainty over the PM’s future.
Thursday’s Brexit meeting may also place pressure on the GBP/USD exchange rate amidst threats from the UK government it will trigger Article 16.
US Dollar (USD) Directionless Following Fed’s Less Hawkish Approach
The US Dollar (USD) is mixed against the Pound (GBP) during today’s session after Federal Reserve Chair, Jerome Powell, signalled that a decision hadn’t yet been reached regarding its $9 trillion balance sheet, despite normalising policy.
Tuesday’s message was less hawkish than expected, with Powell suggesting that it may take up to four meetings for a decision to be made.
Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said:
‘Powell defied the hawkish commentary of others on the Fed’s rate-setting committee, suggesting that a quantitative tightening decision will come in the next two to four meetings, with bonds allowed to roll off in an organic manner – as opposed to actively selling securities into the market.’
At the same time, USD investors are reluctant to make any aggressive bets ahead of the publication of the latest US consumer price index.
This afternoon’s CPI figures are forecast to report domestic inflation rocketed up to 7% in December, potentially placing more pressure on the Fed to accelerate its current tightening cycle.