Pound to US Dollar Exchange Rate Stronger on Hopes for Government’s Brexit Deal
Overnight, the Pound (GBP) saw a jump in demand amid the latest Brexit speculation, briefly bolstering the Pound Sterling to US Dollar (GBP/USD) exchange rate to hit its best levels in over three months.
Due to optimistic Brexit hopes, GBP/USD has gained around two cents this week up until now. GBP/USD opened the week at the level of 1.2875 and currently trends near the level of 1.3085.
However, GBP/USD has been unable to hold the morning’s best level since October: 1.3134. Overall though, the pair is on track to sustain at least a cent’s worth of gains this week and could sustain two cents if the pair holds its ground today.
Next week could be a key week for the Pound as the UK government’s Brexit bill will return to debate in Parliament, and UK MPs could be given a greater say in the direction the Brexit process takes next.
Sterling has been able to gain versus the US Dollar (USD) amid mixed risk-sentiment, but the US Dollar has found solid support in the latest US data too.
Pound (GBP) Exchange Rates Jump on Rumours of Stronger Brexit Support
Demand for the Pound surged overnight, as reports emerged claiming that Northern Ireland’s Democratic Unionist Party (DUP) had privately agreed to back the UK government’s Brexit deal: on one condition.
If the UK government’s long-negotiated Brexit deal had the support of the DUP, it would be more likely to pass into law and lead to a soft Brexit.
The DUP said it would agree to back the deal if UK Prime Minister Theresa May could assure that there would be a clear time limit on the controversial Irish backstop plan.
However, as the EU has said it is not willing to make any significant renegotiations on the Brexit deal, it is perceived as unlikely that such an assurance could be acquired.
The Pound slipped from its best levels as the DUP’s support is still perceived as fairly unlikely despite the rumour.
US Dollar (USD) Exchange Rates Supported by Strong US Ecostats
While there are signs that the US economy is being impacted by the slowing global economic outlook, recent US data has been strong and has indicated that the economy is weathering better than expected.
On top of this, the US job market remains strong. The number of jobless claims made last week reportedly fell to its lowest level in 49 years.
While many of these figures were estimated, they still indicated that US labour conditions were strong which have helped investors to remain optimistic about the US economic outlook, despite slowing global growth.
Thursday also saw the publication of Markit’s US PMI projections for January, which beat expectations in every notable print.
Manufacturing slipped from 54.4 to 54.2, rather than to the expected 54.1. The overall composite print unexpectedly climbed from 54.4 to 54.5.
Pound to US Dollar (GBP/USD) Exchange Rate Investors Anticipate Brexit News
The Pound to US Dollar exchange rate saw another surge on the back of Brexit speculation over the last week, and next week could be yet another week of major movement for the pair.
Events on the way next week include the next full-day UK Parliament debate on Brexit, when UK MPs are expected to vote on certain amendments and legislation that could influence the direction the Brexit process takes next, or lead to a delay.
If the UK government is able to get additional assurances on its deal, the Pound could rise on speculation that the soft Brexit deal may find enough support to pass.
On the other hand, if no amendments pass and there is no sign that MPs will succeed in attempts to block a No-deal Brexit, the Pound could plummet.
While Brexit speculation will drive Sterling throughout the next week, the US Dollar will be influenced by US political developments and US data.
Developments in the ongoing US government shutdown, as well as Friday’s key US Non-Farm Payroll report, could prove influential for the Pound to US Dollar (GBP/USD) exchange rate next week.