GBP/USD Exchange Rate Struggles As May Visits EC President Juncker Ahead of Sunday’s Brexit Summit
The Pound US Dollar (GBP/USD) exchange rate struggled today, trading at $1.28.
Brexit news still remains in focus with investors’ sights set on Prime Minister Theresa May’s meeting with European Commission’s (EC) President Jean-Claude Juncker today.
The Pound (GBP) was not able to benefit when US durable goods orders for October printed at a far worse-than-expected -4.4% against a consensus expectation that the figure would be -2.5%.
Pound US Dollar (GBP/USD) Exchange Rate Remains Sensitive to Brexit News as May Heads to Brussels
The Pound US Dollar (GBP/USD) exchange rate remains sensitive to Brexit news, with the all eyes on Theresa May today as she meets the EC President Jean-Claude Juncker – a meeting that is significantly timed ahead of the Brexit summit this Sunday.
However, it has already been hindered by objections from Spain over the handling of Gibraltar.
Earlier, the Pound (GBP) found itself under pressure after the latest public sector borrowing figures were released by the National Statistics Office.
With October’s net borrowing of £8.8bn this was up against the £7.2bn as reported during the same month last year – a 6.6% increase in central government spending in all.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said:
‘Hefty public borrowing in October has brought the run of good news on the public finances to an abrupt end, though it’s too soon to conclude that the Chancellor is set to miss the forecasts laid out in last month’s Budget.’
USD/GBP Exchange Rate May Stumble Over Weak Durable Goods Figures
The US Dollar Pound (USD/GPB) exchange rate weakened earlier today as US durable goods figures for October printed at -4.4%, which represents the largest fall for 15 months.
Nevertheless, the US Dollar (USD) could strengthen later when the Existing Home Sales figures for October are released by the National Association of Realtors, with the figure expected to reveal a small uptick on September.
The US economy is sensitive to changes in the housing market, and with the expected increase from September’s 5.15M to 5.20M, this could help bolster the ‘Greenback’.
The upside effect on USD of yesterday’s 1.5% increase in October’s US housing starts may be short lived, with Action! Economics analysts predicting the better-than-expected figure was due to ‘impact[s] from hurricanes Florence and Michael … [however] we should see a lift for all the housing data from disaster rebuilding as we approach 2019.’
As stock markets, cryptocurrencies and commodities all plummeted yesterday, the US Dollar was strengthened as investors fled to the safety of USD.
Pound Sterling US Dollar (GBP/USD) Exchange Rate Movement Likely to be Dictated by Sunday’s EU Summit Outcome
The Pound US Dollar (GBP/USD) exchange rate will remain primarily affected by Brexit news this week, with very little US Dollar movement ahead due to the Thanksgiving holiday.
Friday may see the US Dollar (USD) recover slightly, as Markit Economics will be releasing the Services Purchasing Managers Index (PMI) which is expected to remain at its current 54.8, strengthening investor confidence in the ‘Greenback’.
Pound (GBP) investors will have their sights on the Brexit Summit on Sunday where UK and EU leaders are due to meet and approve the two parties’ Brexit withdrawal agreement.
The outcome of the summit will no doubt impact the Pound Sterling USD (GBP/USD) exchange rate when markets open on Monday.