GBP/USD Exchange Rate Firms on Northern Ireland Protocol Optimism
The Pound US Dollar (GBP/USD) exchange rate is climbing on renewed hopes of a deal between the UK and the EU over the Northern Ireland protocol deal.
At time of writing the GBP/USD exchange rate is around $1.1978, a 0.33% leap from the morning’s opening levels.
Pound (GBP) Climbs amid Post-Brexit Deal ‘Final Talks’
The Pound is enjoying modest success this morning as Prime Minister Rishi Sunak meets with European Commission President Ursula von der Leyen.
Reports are growing that Sunak is poised to announce a deal has been struck with the EU over the contentious post-Brexit trade deal. With Sunak meeting with von der Leyen in Windsor, many believe could be ‘final talks’ between the two parties. However, what could be limiting gains for Sterling are the worries of how Sunak intends to sell the deal to hardline Brexiters in his own party and the Democratic Unionist Party (DUP) of Northern Ireland.
Looking ahead, even if a deal was to be struck, ending months of turbulent speculation, the ensuing political volatility that could replace the uncertainty, could weigh heavily on the Pound. If the agreement goes through without a vote in parliament, Sunak could face a backlash from his own Conservative party. Mark Francois, Tory backbencher, warned that it would be unwise to continue with a vote:
‘Just putting in a couple of intermediate phases, with a situation where you still end up with the European court of justice, is effectively sophistry.
‘We’re not stupid. What we want is a situation where EU law is expunged from Northern Ireland so it is treated on the same basis as England, Scotland and Wales.’
US Dollar (USD) Supported by Elevated Rate Hike Bets
Meanwhile, the US Dollar (USD) is holding onto its gains from last week’s boost to interest rate hike expectations. With the Federal Reserve’s preferred measure of inflation printing higher than expected on Friday, USD investors were buoyed.
The Core Personal Consumption Expenditures (PCE) Price index edged higher to 4.7% MoM from 4.6%, The US Dollar Index soared on the data on elevated rate hike bets. The ‘Greenback’ is clinging to these gains, keeping it relatively strong against most of its rivals.
Looking ahead, the US Dollar could rise with a speech from Fed member Philip Jefferson. In a speech focused on the inflation outlook for the US, Jefferson could buoy investors with a hawkish rhetoric.
Comments are closed.