GBP/USD Exchange Rate Rangebound, Brexit Developments Remain in Focus
The Pound US Dollar (GBP/USD) exchange rate held steady at around $1.245 today as UK markets brace for the UK Supreme Court’s ruling on the legality of Parliament’s prorogation.
However, Sterling has failed to benefit against the US Dollar as the Conservative Party regards the prorogation as a ‘purely political matter’. Prime Minister Boris Johnson has also refused to rule out the possibility of suspending the House of Commons again should the Supreme Court deems the suspension unlawful.
Mr Johnson said:
‘I will wait and see what the justices decide, but as I have said before, I believe that the reasons for wanting a Queen’s speech are very good indeed.’
The Pound could sink against the US Dollar today if the Supreme Court deems the prorogation legal as this would further limit the time opposition parties have to challenge Boris Johnson’s hard-Brexit stance.
Today will see the release of August’s UK public finances report which is expected to increase from £-1.971 billion to £6.650 billion. However, with Brexit-related borrowing and government spending the UK’s budget deficit could increase.
USD/GBP Exchange Rate Flattens despite Improving US Manufacturing Sector
The US Dollar (USD) failed to benefit from yesterday’s release of the Chicago Fed national activity index, which strengthened unexpectedly from -0.36 to 0.10.
While this pointed to a strengthening in the US manufacturing sector the Federal Reserve and global political tensions have continued to weigh on US market confidence.
Meanwhile, today will see the release of July’s US housing price index, which is expected to rise from 0.2% to 0.3%. As a result, we could see the USD/GBP exchange rate edge higher.
US-China trade talks, which are remaining in the spotlight for many USD investors, are showing signs of improving with Steven Mnuchin, the US Treasury Secretary, saying that trade talks would resume in two weeks in Washington.
Mr Mnuchin commented:
‘The president’s been very clear if we can get the right deal, he wants the deal. If we can’t get the right deal, he’s happy with the tariffs.’
GBP/USD Outlook: Sterling Could Rise on UN Brexit Deal Breakthrough
US Dollar investors will be looking ahead to August’s US new home sales, which are expected to ease from 0.635 million to 0.660 million.
Meanwhile, Sterling traders will be awaiting tomorrow’s UK BBA mortgage approval figure for August. Any signs of improvement would prove Pound-positive.
The GBP/USD exchange rate will remain sensitive to Brexit developments over the course of the week, any with any breakthrough Brexit deal with the European Union at the UN summit this week, we could Sterling rise.