Details of UK Spending Plans could Cause GBP/USD Exchange Rate Turbulence
Over the week starting 5th March, the Pound to US Dollar exchange rate (GBP/USD) rose over 7th and 8th March, but fell back close to opening levels on 9th March.
This late-week decline for the Pound has been caused by trader anxiety ahead of a major UK economic event, the Spring Budget announcement on 13th March.
Chancellor Philip Hammond will be giving an economic update, which could lead to notable Pound to US Dollar movement.
The Spring Budget is considered less important than the later Autumn Statement, but MPs have implored Mr Hammond to raise the importance of this upcoming event.
Increased spending is the main request from opposition and Conservative MPs, given the perceived pressures on public services such as social care and the NHS.
If Mr Hammond heeds these concerns and announces a surprise increase in spending during 2018, then the Pound to US Dollar exchange rate could rally.
US Dollar to Pound Exchange Rate (USD/GBP) Forecast: USD Losses Possible on US Tariff Specifics
The US Dollar traded tightly against the Pound on 9th March, but may drop in the near-term on fresh details about Donald Trump’s metal tariff plans.
The US President recently announced that there would be charges added to steel and aluminium imports coming into the country, later exempting Canada and Mexico.
These neighbouring exemptions benefit the US, but it is still unclear if other nations or unions (such as the EU) will receive exceptional status.
There are pronounced fears about a trade war erupting between the US and the EU or China, so the US Dollar remains vulnerable to updates.
If there are few exemptions to the tariffs then the US Dollar could plunge in value, because this would raise the chances of retaliatory action from abroad.
Productive US-North Korea Talks could Trigger US Dollar to Pound (USD/GBP) Exchange Rate Rally
Further ahead, the US Dollar to Pound exchange rate (USD/GBP) could be influenced by a meeting between Donald Trump and the North Korean leader, Kim Jong-un.
In an extraordinary development, Trump has accepted an invitation from the North Korean leadership to meet, ostensibly to reduce tensions and improve relations.
The leaders of both nations clashed in 2017 over nuclear weapons and military activity, with insults and military drills punctuating the worrying escalation of conflict.
It is optimistically hoped that Mr Trump and Mr Jong-un could come to a compromise when they meet ‘by May’, thereby reducing the chances of nuclear war.
Experts remain sceptical, however – both men have caustically criticised the opposite nation, while some believe that both will attempt to outdo each other at the talks.
In the event that deals are made and agreements struck, the US Dollar could advance against the Pound because of a de-escalation of a heated international conflict.