Pound US Dollar (GBP/USD) Exchange Rate Volatile amid Brexit Uncertainty
In light of the lull in UK domestic data for most of this week, the Pound Sterling to US Dollar (GBP/USD) exchange rate has once again found itself at the mercy of Brexit. The pairing is currently trading within touching distance of a one-year low at $1.28, having shed over 10 cents since April.
The looming threat of a no-deal UK-EU split has soured market sentiment immensely, and negative headlines coupled with a lack of concrete developments yesterday have left investors waiting to see which direction Brexit takes next.
Pound (GBP) Exchange Rates Slipping as No-Deal Brexit Fears Rise
The Pound (GBP) has been battered in the markets recently following a series of setbacks owing to Brexit developments.
Despite UK Prime Minister Theresa May vowing to take over negotiations personally, her plans have been met with stiff resistance by EU officials, disheartening many prominent Brexiteers.
A no-deal exit has gone from an unlikely outcome to a distinct possibility, forcing Sterling into submission against its major peers and sparking speculation that GBP exchange rates may plummet further should a no-deal Brexit occur in March.
The lack of UK data this week has not helped the Pound, but some high-impact data on Friday in the form of quarterly GDP growth may aid Sterling should the figures be favourable.
US Dollar (USD) Exchange Rates Directed by Trade Anxiety
US Dollar (USD) exchange rates were aided yesterday by some above-forecast domestic job openings data, but beyond some medium-impact data today the ‘Greenback’ may once again find most of its gains coming from trade uncertainty.
Investors continue to turn to the US Dollar as US President Donald Trump’s comprehensive shake-up of US trade policy prompts safe-haven demand, and Trump’s recent tweet (below) has only ripened doubt.
The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!
— Donald J. Trump (@realDonaldTrump) August 7, 2018
Pound US Dollar (GBP/USD) Exchange Rate Forecast: Sights Set on GDP for GBP Relief
As Brexit sentiment worsens, the Pound Sterling to US Dollar (GBP/USD) exchange rate will be on thin ice before the publication of the UK’s second quarter GDP growth on Friday.
Economists predict a growth rate of 0.4%, an increase over the first quarter’s 0.2%, which would be a welcome improvement and may offer the Pound some breathing space.
The UK’s balance of trade is also set to be announced on Friday morning, although this is not expected to have much of an impact.
The US Dollar (USD) may not see major movement for the rest of this session unless a speech from Federal Reserve official Thomas Barkin proves particularly dovish or hawkish.