Pound US Dollar (GBP/USD) Exchange Rate Muted as President Trump Pressures Fed
The Pound Sterling US Dollar (GBP/USD) exchange rate was left flat and the pairing is currently trading at an inter-bank rate of $1.2590.
The US Dollar was left under pressure ahead of Wednesday’s Federal Reserve policy meeting.
Despite facing further demands from US President Donald Trump to slash rates, the Fed is expected to leave interest rates unchanged.
However, it is expected that policymakers could lay the groundwork for a possible interest rate cut later this year.
Commenting on the upcoming meeting, Chief Economist at Northern Trust, Carl Tannenbaum said:
‘[The risks may be rising, but] I don’t think they want to box themselves into a corner. The markets are set up for a cut in July, and if they don’t get it, financial conditions will tighten.’
Sterling (GBP) Flat as Johnson Receives Further Backing
Sentiment in Sterling was left dampened as concern increased over whether the UK was headed for a no-deal Brexit on 31 October.
After dropping out of the race on Friday, Health Secretary Matt Hancock said he would be backing Boris Johnson as leader of the Conservative Party.
Added to this, after being eliminated in the first ballot, Ester McVey also announced her support for Johnson.
The increased risk of a no-deal likely dampened sentiment in Sterling, leaving the UK currency flat against the ‘Greenback’.
Brexit Uncertainty Weighs on Business Investment
Meanwhile, reports revealed that the British Chambers of Commerce (BCC) stated that business investment was expected to be cut by the most in 10 years.
It is forecast that business investment will slump buy -1.3% in 2019 thanks to Brexit uncertainty.
Companies are struggling to press on with long-term plans thanks to continued Brexit uncertainty.
Commenting on this, BCC Director General Adam Marshall stated:
‘Businesses are putting resources into contingency plans, such as stockpiling, rather than investing in ventures that would positively contribute to long-term economic growth.
‘This is simply not sustainable. Business communities expect the next Prime Minister to quickly find a sensible and pragmatic way forward to avoid a messy and disorderly Brexit.’
Pound US Dollar Outlook: Will Higher than Forecast US Building Permits Buoy USD?
Looking ahead to this afternoon, the US Dollar (USD) could slide against the Pound (GBP) following the release of the New York Empire State Manufacturing Index.
If June’s manufacturing index slumps further than forecast, it could dampen sentiment in the Dollar.
Meanwhile, the ‘Greenback’ could edge up following the release of US building permits data.
If the number of US building permits jumps in May, it could cause the Pound US Dollar (GBP/USD) exchange rate to slump.