The Pound has dipped slightly against the US Dollar today, but still remains at a weekly high of 1.25.
Sterling could see greater losses against the US Dollar in the near-term however, depending on how Brexit negotiations affect the flow of EU workers into the UK.
The Office of National Statistics (ONS) has recently estimated that, in some sectors, 10% of UK workers could be EU migrants.
While a relatively small number, any disruptions to this pool of workers may have a knock-on effect on key UK areas such as manufacturing and healthcare.
ONS analysis of the data stated;
‘Today’s analysis shows the significant impact international migration has on the UK labour market. It is particularly important to the wholesale and retail, hospitality, and public administration and health sectors, which employ around 1.5m non-UK nationals. Migrants from Eastern Europe, Bulgaria and Romania are likely to work more hours and earn lower wages than other workers, partly reflecting their numbers in lower-skilled jobs’.
The data has revealed the dependence on using overseas labour to fill less desirable UK roles; Sterling may slide if it seems that Brexit talks will lead to the UK government cutting off this flow of workers.
When it comes to strong US Dollar influencers in the future, the escalating situation in Syria remains a key factor.
Ever since the US launched a missile attack on a Syrian regime airbase on April 6th, the US has been inexorably dragged into the quagmire of Syrian, Russian and international politics in the Middle East.
The US attacked Syria after it allegedly deployed chemical weapons on civilians, which led to Russian Prime Minister Dmitry Medvedev declaring that the US and Russia were ‘on the verge of a military clash’.
Since then, Russia has vetoed a UN draft resolution to condemn the chemical attack and ensure Syrian regime cooperation with investigators.
This has driven the US-Russian wedge deeper, with President Donald Trump declaring that;
‘We’re not getting along with Russia at all. We may be at an all-time low’.
If relations between the two world superpowers continues to deteriorate over the Syria situation traders could lose confidence in the US Dollar considerably. This is especially likely given Trump’s seemingly-erratic decision making process, as well as his tendency to announce major decisions at short notice on social media.
Recent Interbank GBP USD Exchange Rates
At the time of writing, the Pound to US Dollar (GBP USD) exchange rate was trading at 1.25 and the US Dollar to Pound (USD GBP) exchange rate was trading at 0.79.