GBP/USD Exchange Rate Rangebound as Investors Shrug Off Brexit Fears
The Pound to US Dollar (GBP/USD) exchange rate held steady today, with the pairing currently trading around $1.315.
Sterling is rangebound with the US Dollar (USD) this morning as investors shrug off fears of a possible no-deal Brexit on December 31st.
As a result, the Pound has edged higher against some of its peers as risk-sentiment improves as the global economy stabilises on hopes of a US-China trade deal.
Francesco Pesole, Currency Strategist at ING Bank, commented:
‘GBP positioning is a good indication of how investors are currently keeping a highly complacent approach to the Brexit story. While the collapse of Brexit negotiations late last week will only be mirrored in next week’s CFTC positioning report – and we may see the rebuild of some GBP shorts – sterling’s positioning is still far from the levels it hovered around when markets were pricing in a no-deal Brexit.’
Meanwhile, GBP investors will be looking ahead to today’s speech by Andrew Haldane, the Bank of England’s (BoE) Chief Economist. If he is downbeat about the British economy, however, we could see the GBP/USD exchange rate begin to fall.
US Dollar (USD) Steady as Hopes Remain Over US-China Trade Deal
The US Dollar (USD) held steady today following a surge in market optimism on renewed hopes of a US-China trade deal. This followed comments from both Washington and Beijing. Both are still committed to the Phase One trade deal.
Eswar Prasad, the former head of the International Monetary Fund’s China division, commented:
‘These two economies are still quite closely tied. After all, it’s very hard for the two largest economies in a way to stop bumping into each other in various dimensions.’
Today will see the release of July’s durable goods orders, which are expected to rise by 4.3%. However, with investors focusing on global trade developments instead, this is unlikely to provide much of a boost for the ‘Greenback’.
GBP/USD Forecast: Could a Breakdown in UK-EU Trade Talks Drag Down Sterling?
US Dollar (USD) traders will be awaiting tomorrow’s release of the flash US GDP figure for the second quarter. If this confirms consensus and falls by -32.5%, then we could see the ‘Greenback’ suffer as doubts begin to grow over the strength of the American economy.
Tomorrow will also see the US Federal Reserve’s Chairman, Jerome Powell, deliver a speech. If he is notably downbeat about America’s economic performance, then we could see USD benefit from increased safe-haven demand.
The GBP/USD exchange rate will continue to fluctuate on growing speculation around Brexit. Any signs of UK-EU trade talks breaking down further would prove GBP-negative.