GBP/USD Exchange Rate to Fall Amongst UK Conservative Party Chaos?
The Pound US Dollar (GBP/USD) exchange rate is muted as UK political drama continues to infuse volatility into Sterling.
At the time of writing the GBP/USD exchange rate is trading at around $1.1203, which has barely changed from this morning’s opening rate.
Pound (GBP) to Tumble as Truss’s Political Future is Questioned?
The Pound (GBP) is struggling to find much support this morning as Truss’s government falls into chaos.
The volatility follows the unexpected departure of Home Secretary Suella Braverman yesterday over a security issue. Turbulent scenes within the House of Commons concerning a fracking vote last night have also put multiple Tory MP’s at risk of disciplinary’s.
A growing chorus of MP’s are now calling for Truss’s resignation, ahead of the 1922 Committee meeting set to take place today.
Looking ahead, a lack of UK data today will see investors trade on further political developments, which is sure to infuse further volatility into the Pound.
Turning to tomorrow, the UK’s latest retail sales release could place additional pressure on GBP. Forecasts are predicting a contraction in sales figures of the month.
US Dollar (USD) to Regain Foothold amid Escalating War in Ukraine
The US Dollar (USD) is muted against the Pound, but struggling for support elsewhere amid a mixed market mood.
However, this surprising risk appetite could wain amongst investors as geopolitical tensions within Europe continue worsen. Russia is currently using kamikaze drones to devastate Ukraine’s infrastructure and civilian population. Most recently attacks on power stations across Ukraine has resulted in country wide blackouts.
Risk aversion could also be stoked by the ongoing concern of a global recession. Central banks are continuing to hike interest rates, and growth is beginning to slow in multiple countries. As such, USD could get a boost as investors begin to flock back to the safe-haven ‘Greenback’.
This potential boost in the US Dollar could also underpinned by jobless claims data due this afternoon. Forecasts predict that the figures are to remain low, which could indicate that the US jobs market is strong.
Finally, ‘Greenback’ could recoup its losses from this morning in response to several Federal Reserve speeches that are due this evening. If the tone of each speech is hawkish then USD could climb significantly on the expectation of another aggressive interest rate hike.