Pound US Dollar (GBP/USD) Exchange Rate Muted as Brexit Tensions Continue
The Pound Sterling US Dollar (GBP/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.2675.
On Tuesday, Conservative leadership candidate Jeremy Hunt warned that the party would be committing ‘political suicide’ if it tries to push through a no-deal Brexit.
Speaking to BBC Radio 4’s Today programme, Hunt stated that a no-deal would result in a general election which could see the Conservatives lose power.
Jeremy Hunt stated:
‘I’m worried that if we don’t solve it [Brexit], we will face a political crisis that is far bigger actually than our legal relationship with the EU, it could lead to the destruction of our party system and the end of my own party.’
Meanwhile, another leadership contender Esther McVey stated it would be ‘political suicide’ not leaving the EU on 31 October.
US Dollar (USD) Flat as Trade Tensions Ease
The safe-haven US Dollar (USD) benefitted as investors were nervous about political risks in Europe despite pro-EU parties winning a majority of European parliamentary seats.
However, on Tuesday morning the ‘Greenback’ was left muted against Sterling.
Meanwhile, on Monday US President Donald Trump said that he expected the US and China to be ‘announcing some things, probably in August, that will be very good for both countries’ on trade.
Washington wants Tokyo to slash tariffs on US farm products in order to restore competitiveness after President Trump shunned the 11-nation Pacific trade pact.
Kumiko Ishikawa, Senior Analyst at Sony Financial Holdings stated:
‘While it’s positive that there will be time for solving the US-Japan trade issue, that doesn’t mean the problem has been resolved. [But] it’s providing some relief.’
However, Japanese Economy Minister Toshimitsu Motegi said Trump’s comment reflected his hope for quick progress in trade talks.
Speaking to reporters, Motegi said:
‘When you look at the exact wording of his comments, you can see that the president was voicing his hopes of swift progress in talks towards something that is mutually beneficial.’
Pound US Dollar Outlook: Will US GDP Buoy the USD?
Looking ahead to Thursday, the US Dollar (USD) could rise against the Pound (GBP) following the release of US GDP.
If the US economy expands more than forecast in the three months leading to March, the ‘Greenback’ could receive an upswing of support.
However, later in the afternoon the US Dollar could slide following the release of the US pending home sales.
If pending home sales do not rise as high as forecast in April, it could cause the Pound US Dollar (GBP/USD) exchange rate to rise.