GBP/USD Exchange Rate Steady Following Recent Brexit Rally
The Pound US Dollar (GBP/USD) exchange rate is treading water this morning as GBP investors digest recent Brexit developments.
At the time of writing the GBP/USD exchange rate is virtually unchanged from this morning’s opening levels, leaving the pairing close to the three-week high struck overnight.
Pound US Dollar (GBP/USD) Exchange Rate Muted as Markets Take Stock of Recent Brexit Developments
After punching higher in the first half of the week, the Pound (GBP) appears to be taking a breather this morning as markets reflect on the progress being made towards a Brexit deal.
Recent reports indicate those involved in negotiations believe that an agreement is ‘very close’ with some analyst suggesting the UK and EU could finalise a Brexit deal by Monday, just in time for the next EU summit of leaders on Wednesday.
This optimism has helped to drive a rally in Sterling over the last week and allowing the GBP/USD exchange rate to strike above $1.32 for the first time since last September.
However one lingering concern is Theresa May’s ability to sell the deal at home as she faces considerable pressure from hardliners within her own party as well as the Democratic Unionist Party (DUP) over her plans.
The PM is set to brief her ministers later today in an effort to ‘bind ministers into Number 10’s approach’.
This could have major ramifications for the Pound as if she fails to win over critics of her plan then they may potentially be able to derail the Brexit deal by making life difficult for the PM, especially if the DUP follows through with its threat to withdraw is support for May’s government, leading her to lose her slim majority in the House of Commons.
GBP/USD Exchange Rate Forecast: Will Today’s US Inflation Figures Impact the US Dollar?
Looking ahead, movement in the Pound US Dollar (GBP/USD) exchange rate is likely to be driven by the release of the latest US Consumer Price Index (CPI) later this afternoon.
This may lead to the ‘Greenback’ retreating if US inflation is shown to have slowed again in September as economists suspect.
Conversely a surprise rise in inflation remains a possibility given the recent surge in oil prices, with a robust CPI reading likely to strengthen the US Dollar as it bolsters Federal Reserve rate expectations.
Meanwhile in the absence of any notable UK data, movement in the Pound is likely to continue to be driven by Brexit sentiment for the remainder of the week, with Sterling likely to strengthen if headlines remain positive.