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GBP USD Exchange Rate Forecast: Mutual Respect in Brexit Negotiations Key to Future Pound Stability

AM Update January 20th; the Pound has ticked up against the US Dollar today, ahead of a high level of predicted turbulence on Donald Trump’s inauguration in the evening. As it stands, major Sterling gains are forecast, assuming that investors voice their uncertainties about the US under Trump at that time.

The Pound has been in a high state of turbulence against the US Dollar this week, with the future set to bring further large bumps in the road for both GBP USD exchange rate stability.

PM Update January 20th; the Pound has dipped against the US Dollar over the course of trading today, falling by -0.3% in the pairing after the morning’s UK retail sales figures for December showed negative figures on the month and slowdowns on the year, with and without fuel.

At one of the times of the year when retail sales are meant to soar, this disappointing result has limited confidence in Sterling significantly.

Pound US Dollar Recovery Seen after Second PM Speech Focusses on ‘Global Britain’

The Pound has managed to climb by 0.6% against a battered US Dollar today, but storm clouds remain on the horizon when it comes to the implementation of Brexit.

Having rocked Sterling on Tuesday and Wednesday with a speech outlining Brexit plans, Theresa May gave further comment today at the World Economic Forum (WEF), though these remarks were largely echoes of Tuesday’s statements.

The US Dollar has been soft in the last remaining hours before Donald Trump’s inauguration, following concerns that Trump’s wildly ambitious economic growth plans may come at odds with more measured estimates from the Federal Reserve.

Future Pound Sterling Stability Needs Like-for-Like Brexit Talks, not ‘Tit-for-Tat’

If the Pound US Dollar exchange rate is to hold its ground in the future, then a cordial tone in Brexit negotiations seems a strong requirement.

This week’s talk of Brexit has been polarised between possibly punitive deals and keeping friendly relations between the UK and EU after parting. The overall stance taken by EU leaders now that they know the UK’s aims will be a strong influence on Sterling’s faring against the US Dollar going ahead.

If, as Theresa May seems to be hoping, the EU will come around to the idea of mutual gain through post-Brexit trade deals rather than bipartite damages, then the Pound may be spared some of the worst Brexit-induced volatility in the future.

US Dollar Shift Depends on President Trump’s First 100 Days Plans

With Donald Trump in the Oval Office, US Dollar movement is likely to mirror the volatile President himself, with unpredictable and dramatic shifts in demand coming depending on the 45th President’s whims.

While the future of the US remains unclear, there are several possibilities on the table for Trump’s key first 100 days.

If, for example, Trump attempts to implement his most controversial plans, such as mass-deporting illegal immigrants and constructing a border wall between the US and Mexico, then the US Dollar is expected to drop considerably.

If Trump finally displays some Presidential nous once in power, however, by testing the waters and adopting a measured policy approach, then the US Dollar could yet firm against the Pound due to reassured investors.

Recent Interbank GBP USD Exchange Rates

At the time of writing, the Pound US Dollar (GBP USD) exchange rate was trending in the region of 1.23 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.81.