Pound Sterling to US Dollar (GBP/USD) Exchange Rate Fights Back amidst Brexit Chaos
The Pound to US Dollar (GBP/USD) has bounced back 0.8% today, pushing the pair back above $1.28 from yesterday’s low when Brexit chaos pummelled Sterling.
Further recovery for the Pound (GBP) came as Environment Secretary Michael Gove threw Prime Minister Theresa May a lifeline by opting not to resign, consolidating market optimism for Sterling.
However, investors remain concerned over the possibility of there being a vote of no-confidence, with rebel Conservative Jacob Rees-Mogg rallying other Brexiteers in an attempt to oust May over her UK-EU agreement.
Pound US Dollar (GBP/USD) Exchange Rate Recovers Ground Despite Brexit
The Pound was aided in its rally against the US Dollar after yesterday’s disappointing Philadelphia Fed Manufacturing Index for November, which came it at 12.9 compared to the previous period’s 22.2.
However, Sterling still remains vulnerable to political turmoil, with reports that Conservative whips have been ordered back to London raising fears among traders that a no-confidence vote may be imminent.
USD/GBP Falters as Fed Regional President Bostic Takes Foot off US Dollar’s Gas Pedal
Despite European political jitters, the USD Dollar exchange rate failed to reclaim strength, weakening against Sterling.
Furthermore, the Atlanta Fed’s President Raphael Bostic dampened investor’s sentiment in the US Dollar as he cautioned against increased monetary tightening, insisting that ‘neutral is where we want to be’, saying:
‘And while I wrestle with that choice, one thing seems clear: there is little reason to keep our foot on the gas pedal.’
GBP/USD Exchange Rate Outlook: Markets Await MPs’ Response to May’s Brexit Deal
With next week’s data calendar relatively quiet the US Dollar may be left to react to upcoming US housing figures and durable goods orders, with shifts in risk-sentiment and UK political news much more likely to drive the Pound to US Dollar (GBP/USD) exchange rate next week.
It remains to be seen whether the Pound’s rally against the US Dollar is a flash in the pan, and whether there will be a vote of no-confidence in Prime Minster Theresa May.
Overall, GBP investors will remain focused on Brexit going forwards, with political factors likely to outweigh economic ones next week.