Pound to US Dollar Exchange Rate Slides as Brexit Uncertainties and US Data Weigh
After weeks of mixed performance in the US Dollar (USD), the US currency has seen rising demand recently due to hopes for US economic resilience and this has led to Pound Sterling to US Dollar (GBP/USD) exchange rate losses since last week.
Last week saw GBP/USD open at the level of 1.3080 and briefly edge higher, before tumbling and closing the week closer to the level of 1.2995.
Movement this week has been similar so far, with GBP/USD remaining briefly buoyant in quiet Monday trade before tumbling over half a cent yesterday.
At the time of writing this morning, GBP/USD trended near a weekly low of 1.2921. This was the lowest level in over two months, since February.
The Pound (GBP) remains unappealing amid uncertainties over how Brexit will proceed, while the US Dollar is firming on safe haven demand ahead of major US data later in the week.
Pound (GBP) Exchange Rates Fail to Hold Rebound as Brexit Uncertainties Persist
When markets reopened following Easter bank holidays on Tuesday, and UK Parliament resumed following an Easter recess, hopes briefly rose that there could be fresh progress in the Brexit process sooner rather than later.
However, analysts noted that there seemed to have been little progress in talks between Prime Minister Theresa May and opposition Leader Jeremy Corbyn, dampening hopes that the ongoing deadlock could be broken soon.
It is also being increasingly reported that pressure on the Prime Minister to name her resignation date is building, worsening general UK political uncertainty as well as Brexit uncertainties.
A separate report, published yesterday, claimed that Prime Minister May was planning a fourth vote of sorts on her government’s Brexit plan, to be held in Parliament as soon as next week.
The government’s Brexit plan has already been blocked by Parliament three times, so this news and the week’s lack of fresh support ultimately left Sterling limp yesterday.
US Dollar (USD) Exchange Rates Firm as Investors Anticipate Major Data
As a safe haven currency, the US Dollar’s appeal has been resilient over the last week with broad market uncertainties over global trade jitters and growth slowdown making investors more hesitant to take risks.
While recent US data has been mixed, it has generally been resilient enough for to make markets more hopeful for US economic resilience.
While other currencies are buffeted by slowdown or political concerns, this leaves the US Dollar more appealing in comparison.
Investors are currently expecting that US growth was fairly solid in Q1 2019, despite the slowdown experienced in other major economies. The US Dollar is firming as investors anticipate the Q1 US growth report, due on Friday.
Demand for the US Dollar was further supported by yesterday’s US home sales stats, which printed at a surprisingly strong 4.5%.
Pound to US Dollar (GBP/USD) Exchange Rate Outlook to be driven by US Data
As Pound volatility remains lower and analysts generally do not expect any major Brexit developments any time soon, the Pound to US Dollar (GBP/USD) exchange rate is more likely to be driven by major US ecostats for the remainder of the week.
No major US data will be published today, but tomorrow’s durable goods orders and especially Friday’s Q1 Gross Domestic Product (GDP) growth rate stats could be particularly influential for the US Dollar.
If US growth comes in even stronger than expected, the US Dollar’s appeal as a safe haven currency will strengthen and investors may even speculate that the Federal Reserve could take a more hawkish tone again on monetary policy after all.
The US Dollar’s trajectory would be little-changed if the data is unsurprising though, and would simply continue to react to shifts in risk-sentiment as well as the strength of the Pound.
UK business optimism and factory data from CBI will be published tomorrow. If these are particularly surprising or if there are unexpected Brexit developments in the coming days, they could also cause movement in the Pound to US Dollar (GBP/USD) exchange rate.