GBP/USD Exchange Rate Improves as No-Deal Brexit Gains Resistance
The Pound US Dollar (GBP/USD) exchange rate edged higher today, with the pairing trading around $1.215 as opposition mounts against a no-deal Brexit increases following Labour leader Jeremy Corbyn call for cross-party unity against Prime Minister Boris Johnson.
The latest Liberal Democrat MP Sarah Wollaston has also appeared to back Jeremy Corbyn, saying that to do so would be ‘the lesser of the two evils’.
Guto Bebb, a former Conservative minister, commented:
‘I do think that those who have said that they will do anything necessary to stop the long-term damage of a no-deal exit must take seriously this type of offer… I certainly take the view that a short-term Jeremy Corbyn government is less damaging than the generational damage that would be caused by a no-deal Brexit.’
Sterling has benefited today from the increasing resistance against a no-deal exit from the European Union on October 31.
USD/GBP Exchange Rate US Dollar Traders Brace for US Consumer Sentiment Index
US Dollar traders are also feeling apprehensive ahead of today’s publication of the flash US Michigan Consumer Sentiment Index for August, which is expected to ease from 98.4 to 97.2.
Housing starts figures for July, however, are expected to improve in July, potentially providing some uplift for the ‘Greenback’ later on this afternoon.
However, US-China trade tensions and slowing global economic woes are continuing to weigh on sentiment in the US Dollar.
The ongoing tariff war between the two superpowers has also increased, with a likelihood that Beijing may be forced to prop up its economy as the US imposes new tariffs on Chinese imports in September and December.
Bruce Kasman, a Chief Economist at J.P. Morgan, commented:
‘I think it’s encouraging to see they’ve been moving on multiple fronts, it’s encouraging to see that it’s having some effect on the economy… I think we have a heightened risk of recession. I think the reason is that we’re seeing the intensification of the big drag in the global economy this year.’
GBP/USD Outlook: Could Sterling Rise as No-Deal is Challenged?
Sterling traders will be looking ahead to Monday’s publication of the UK Rightmove House Price Index in August.
Any signs of improvement could provide further encouragement for Sterling as the UK remains relatively resilient despite ongoing no-deal Brexit fears.
Meanwhile, US Dollar investors will be looking ahead to Wednesday’s Federal Open Markit Committee minutes report. Any dovish remarks about the state of the US economy could weigh on the USD/GBP exchange rate.
The GBP/USD exchange rate will likely hold on to some of today’s gains into next week, as Sterling will benefit from increasing pressure against a no-deal Brexit.