GBP/USD Exchange Rate Becalmed as Brexit ‘Meaningful Vote’ Draws Closer
The Pound US Dollar (GBP/USD) exchange rate began to slip over the course of the morning before rising again slightly, and is currently trading at a rate of $1.2867.
Parliament begins its fourth day of Brexit discussions, with Prime Minister, Theresa May stating that the European Union rejected her request for a time limit to the Irish backstop, and that she will not extend Article 50.
As a result, Brexit pessimism likely caused the Pound to drop earlier in the morning.
Boris Johnson has dismissed claims that voting down Theresa May’s withdrawal agreement will lead to no Brexit rather than a no-deal, stating:
‘Some colleagues are being scared by this idea that there might be no Brexit as a result of voting it down. I think that’s nonsense.
Britain will leave in March, absolutely, and that’s the bottom line.’
GBP/USD Exchange Rate Buoyed by Delayed Brexit Reports
Friday saw the GBP/USD exchange rate spike following a report that there could be a delay to the UK leaving the European Union as planned.
A senior minister stated: ‘Certainly, if there was a defeat on Tuesday and it took some time before it got resolved, it’s hard to see how we can get all the legislation through by March 29th.’
Despite this being denied by Theresa May’s spokeswoman, Sterling still remained buoyed by this rumour as an extension on Article 50 would be Sterling positive.
GBP/USD Exchange Rate Falls Despite Steady US Consumer Price Index Growth
The US Dollar fell against the Pound over the course of Friday despite the release of the consumer price index (excluding food and energy) for December showing steady growth of 2.2%.
Despite this, the consumer price index also showed that there was a growth of 1.9% compared to 2.2% the previous December, which likely did not aid the Dollar in pushing back against the Pound.
This figure dropped for the first time in nine months in December as a result of a fall in the price of gasoline, although underlying pressures remained steady as healthcare costs and rental housing increased.
GBP/USD Exchange Rate Outlook: Will Theresa May’s Brexit Withdrawal Act Get Passed?
With a lack of UK and US data to be released today – the latter as a result of the US government shutdown – it is expected that the pairing will move if the parliamentary discussions suggest that the Prime Minister has enough support to get the Brexit withdrawal agreement passed.
With the ‘meaningful vote’ being held tomorrow following a fifth day of debate, it seems likely that the pairing could drop if there are signs that Theresa May will not be able to get the Brexit withdrawal act passed.
Secretary of State for International Trade, Liam Fox, has voiced his plans for voting in support of the Prime Minister, although he doesn’t believe enough of his colleagues will vote for it to be passed, which could see the Pound plummet tomorrow.
Tuesday will also see the release of the US Producer Price Index for December, with the forecast suggesting that there will be steady growth at a rate of 2.7%. Although, if this figure falls, it could see the Dollar slip against the Pound.