Pound US Dollar (GBP/USD) Exchange Rate Rises on Article 50 Extension Rumours
The Pound US Dollar (GBP/USD) exchange rate was heavily influenced by political news as it emerged that the second ‘meaningful vote’ on Brexit had been delayed.
Sterling has so far made gains on Monday, with the pairing currently trading at an inter-bank rate of $1.3077.
UK Prime Minister Theresa May announced that the meaningful vote will take place on 12 March, just 17 days before the UK’s scheduled departure from the European Union.
Reports have suggested that May had been considering whether or not to delay the UK’s exit from the EU for up to two months, which may also have buoyed Sterling.
Labour MP Yvette Cooper’s amendment to prevent a no-deal Brexit could be passed, as three government ministers have added their support.
Discussing the possibility of amendment, Ulrich Leuchtmann, head of FX research at Commerzbank, said:
‘I expect GBP appreciation if May loses the ability to put pressure on MPs by threatening a no-deal scenario.’
However, it has been reported that during today’s meeting between May and German Chancellor, Angela Merkel the issue of extending Article 50 only came up ‘fleetingly’.
The Press Association reported that the ‘issue of extending Article 50 came up briefly in the meeting, and May reiterated that the UK wanted to leave the EU with a deal on the scheduled date of March 29, the official said.’
Donald Trump Sparks US-China Trade Hope with Tariff Delay
US President Donald Trump announced that the US will in fact be delaying further trade tariffs on Chinese goods that were scheduled for 1 March.
Trump also added that if there was further progress made he was planning a summit with his Chinese counterpart, Xi Jinping, in Florida to cement the trade deal.
On Sunday, Trump tweeted:
‘I am pleased to report that the US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.
‘As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for US & China!’
Asian markets reacted positively to this announcement, however it has been pointed out that an easing of US-China tensions will not stop the global economic slowdown that is currently underway.
GBP/USD Outlook: Will a Dovish Inflation Report Dampen Sterling Sentiment?
The Pound Sterling US Dollar (GBP/USD) exchange rate is likely to fluctuate this afternoon following the release of January’s Chicago Fed National Activity Index.
If this figure rises from December’s 0.27, it could buoy the US Dollar.
The start of Tuesday’s session could see movement following the release of the UK Inflation Report Hearings and PM Theresa May’s speech.
If the tone of the inflation report is upbeat or hawkish it could buoy Sterling, although any Brexit pessimism resulting from May’s will have the opposite effect.
At the same time, sentiment for the US Dollar could rise if Federal Reserve Chair Jerome Powell’s tone is hawkish when testifying before US Congress.
If Powell’s overview of the economy and monetary policy is largely positive it could buoy the ‘Greenback’.