Afternoon Update; January 26th, 2017
After starting off trading in a poor position today, the Pound US Dollar exchange rate has remained down today, dropping by -0.4%.
Recent news has concerned the publishing of the bill for MPs to debate before they allow the Government to trigger Article 50; even this apparent concession has been met with unrest due to only five days being allocated to debate and amend the bill.
The US Dollar has continued to rally at present, with investors remaining confident in Donald Trump’s ability to boost the performance of the US economy in the future. Trump has recently hinted that he could shift his sights to the North American Free Trade Agreement (NAFTA), having claimed that the US has a trade deficit in the billions with Mexico.
As of writing, the GBP EUR exchange rate was in the region of 1.25 and the USD GBP exchange rate was in the region of 0.79
Morning Update; January 26th, 2017
The Pound US Dollar exchange rate has crashed today, following a surge in demand for the US Dollar after some spectacular stock market movement.
For Sterling, the latest UK news has shown that while Q4 GDP growth rates remained positive, the UK is still heavily dependent on the services sector for growth, pointing to possible problems further down the line.
In the US, despite the bombast and boundless ambition of Donald Trump’s plans to construct a vast US-Mexico border wall, investors have still flocked to the US Dollar after the Dow Jones industrial average broke 20,000 for the first time on Wednesday due to optimism about the US economy.
As of writing, the GBP EUR exchange rate was in the region of 1.25 and the USD GBP exchange rate was in the region of 0.79
The GBP USD exchange rate has advanced after the UK Supreme Court ruled in favour of Parliament voting on the triggering Article 50, but this could result in upsets further down the line.
The US Dollar’s latest losses come as Donald Trump gets stuck into the business of running the US, having started the ball rolling on a number of ambitious US economic projects.
Pound US Dollar Exchange Rate Weakened after Supreme Court Decision Opens Pandora’s Box on Amendments
The Pound has risen against the US Dollar today, amid a surge of activity in both UK and US political institutions.
UK news has focused on the Government’s response to a Supreme Court decision, which denied Government authority on triggering Article 50 and instead turned it over to both houses of Parliament.
While Theresa May declared that this did not affect her Brexit timetable, MPs were quick to suggest amendments to the bill to trigger Article 50, which could throw off the ‘late March’ deadline and upset the PM’s schedule.
For the US Dollar, President Donald Trump has been the main source of input. Trump has gotten both feet wet when it comes to political action, having already cut the hiring of government officials and approved plans for the construction of vast oil pipelines.
Confidence in the USD has waned recently, however, partly due to concerns that Trump may be enacting an authoritarian agenda when it comes to national media.
Future Pound Demand to be Decided by Extent of MP’s Amendments on Article 50 Bill
Just what form the proposed amendments to the Article 50 bill take could have a strong impact on Pound demand going ahead, given that they might include provisos for the Government to take into Brexit negotiations.
When proper discussions with EU officials finally do get underway, the Government may avoid providing a running commentary on the matter.
However, if the Article 50 amendments are set up to limit the amount of radical changes the Government can implement, then the Pound may appreciate instead of plummeting when the time to leave the EU comes.
US Dollar Demand Tied to Trump’s Ability to Put Words into Action
Major gains for the US Dollar in the wake of Trump’s inauguration have so far come from signs that Trump will commit to his promises of massive infrastructure spending, job creation and tax cuts.
If the new President fails to deliver on these ambitious schemes, however, then investors may be put off by a leader who is ‘all talk’ and the US Dollar could slide accordingly.
One potential example of this is the much-touted scheme to build a vast border wall with Mexico, for which Mexico was claimed to be footing the bill but will in reality be paid for by US federal funds.
This goes against Trump’s widely publicised campaign promises and may prove fiscally crippling in the long-term, which could see confidence in Trump and the US Dollar’s value rapidly erode.
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 1.25 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.79.
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