Pound US Dollar (GBP/USD) Exchange Rate Rises as Boris Johnson Loses Vote to Tory Rebels
The Pound Sterling US Dollar (GBP/USD) exchange rate rose and the pairing is currently trading at an inter-bank rate of $1.2160.
In his first vote since becoming Prime Minister, Boris Johnson lost to Tory rebels on Tuesday evening.
Rebels joined the opposition in voting 328 to 301 to take control of parliament’s agenda allowing MPS to bring forward a Brexit delay bill.
Johnson argued the bill which seeks to rule out a no-deal Brexit would ‘hand control’ of negotiations to the EU.
However, the move proved to be Sterling positive, allowing the pairing to rebound from a three-year low as there is a lower chance of a chaotic no-deal Brexit.
MPs are set to vote on the Brexit delay bill later today, with a vote on an early general election expected to follow.
UK Services Sector ‘Clung’ on by its ‘Fingertips’ in August
Wednesday’s much-awaited UK services PMI revealed that growth within the sector slowed in August.
The UK service PMI registered at 50.6, down from July’s 51.4.
Survey data showed that there was slower increases in both new work and staffing levels.
Added to this, confidence plummeted to its lowest level recorded since July 2016.
Meanwhile, the PMI composite slumped into contraction territory, falling from 50.3 to 49.7.
Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘The services sector clung on by its fingertips this month remaining just above the no-change mark as domestic and export clients abandoned spending in favour of a wait and see approach and the political environment became increasingly murky.
‘There was also no respite from the increasingly lacklustre UK economy and Sterling’s performance did little to help as service providers reported the fastest rising costs since January for salaries and fuel which they were then unable to pass on.’
US Dollar (USD) Falls as Manufacturing Contracts for First Time in Three Years
Meanwhile, on Tuesday data from the United States revealed that manufacturing contracted for the first time in three years.
The US ISM manufacturing PMI slumped to 49.1, ending a 35-month expansion period.
Ongoing trade tensions between the US and China hit the manufacturing sector, and commenting on this Chair of the ISM Manufacturing Business Survey Committee stated:
‘Respondents expressed slightly more concern about US-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders.’
The ‘Greenback’ was left under further pressure as the US Markit manufacturing PMI fell to 50.3.
Despite the PMI remaining above 50, this was the lowest level since September 2009.
Pound US Dollar Outlook: Disappointing Non-Manufacturing PMI to Weigh on USD?
Looking forward, the Pound (GBP) could continue to edge up against the US Dollar (USD) following the vote on the Brexit delay bill.
If MPs vote in favour of blocking a no-deal it is likely the UK currency will rise.
Meanwhile, on Thursday the Dollar could continue to slide following the release of the US ISM non-manufacturing PMI.
If August’s PMI follows the recent trend and disappoints, it is likely the Pound US Dollar (GBP/USD) exchange rate will rise.