Pound US Dollar (GBP/USD) Exchange Rate Slides as Energy Prices Boost UK Inflation
The Pound Sterling US Dollar (GBP/USD) exchange rate slipped and the pairing is currently trading at an inter-bank rate of $1.2663.
On Wednesday morning data revealed that April’s UK Consumer Price Index (CPI) rose by an annual rate of 2.1%.
This was the highest rise since December, and brought the figure above the Bank of England’s 2% target.
The Office for National Statistics (ONS) revealed that electricity and gas prices were the largest driver of inflation in April.
However, this was still below market expectations of 2.2%, which likely dampened sentiment in Sterling.
Sterling (GBP) Slides to Four-Month Low
On Wednesday, Sterling fell to a fresh four-month low as Brexit uncertainty hit as Theresa May presented her last-ditch Brexit deal.
The Prime Minister’s offer of a vote on a second referendum and a compromise on customs arrangements failed to win the support of lawmakers.
Both Conservative and Labour MPs criticised May’s Brexit deal, with reports suggesting that some senior Tories have upped the efforts to oust the Prime Minster.
As a result this further dampened sentiment in Sterling.
However, the 1922 Committee has previously refused to change the rules on a no-confidence vote.
Meanwhile, commenting on the changes to the deal, Boris Johnson stated:
‘We are being asked to vote for a customs union and a second referendum.
‘The Bill is directly against our manifesto – and I will not vote for it. We can and must do better – and deliver what the people voted for.’
US Dollar (USD) Rises as Beijing Insists the Door is ‘Open’ on Trade Talks
China has called on the US to resume trade talks as the tensions between the two drags on.
Speaking to Fox News, Chinese Ambassador to the US, Cui Tiankai said:
‘China remains ready to continue our talks with our American colleagues to reach a conclusion. Our door is still open.’
This likely provided relief to markets, however, Cui Tiankai blamed Washington:
‘It’s quite clear it is the US side that more than once changed its mind overnight and broke the tentative deal already reached.
‘So we are still committed to whatever we agree to do, but it is the US side that changed its mind so often.’
Pound US Dollar Outlook: Will Disappointing US Manufacturing Weigh on USD?
Looking ahead to this evening, the US Dollar (USD) could slide against the Pound (GBP) following the release of the US Federal Open Market Committee (FOMC) minutes.
If the minutes reiterate the Federal Reserve’s ‘patient’ stance or suggest that there could be a rate cut in 2019, the ‘Greenback’ could be dampened.
Meanwhile, on Thursday the Dollar could slide following the release of the US flash Markit manufacturing PMI.
If May’s PMI shows that the US manufacturing sector is expanding at a slower pace than forecast, the Pound US Dollar (GBP/USD) exchange rate could slide.