GBP/USD Exchange Rate Falls after Trump Criticises May’s Brexit Deal
The Pound US Dollar (GBP/USD) exchange rate showed a sharp correction this morning and is currently trading at US$1.2748 – down almost 0.5% – after some comments made by US President, Donald Trump about Prime Minister Theresa May’s Brexit withdrawal agreement.
The US Dollar, meanwhile, has been buoyed by its safe-haven status, with increasing concerns that the global economic situation is slowing down.
This comes on the back of Trump’s comments to the Wall Street Journal that he would increase tariffs on Chinese exports, further exacerbating tensions ahead of Friday’s G20 meeting in Buenos Aires, Argentina.
The Pound (GBP) has taken a number of hits from comments levied at May over the past couple of days, with her efforts to convince MPs in Parliament to approve the Brexit deal coming under heavy fire, domestically and internationally.
Pound US Dollar (GBP/USD) Exchange Rate Hit after Trump’s Brexit Comments
Donald Trump’s comments on May’s EU-UK Brexit deal hit Sterling today, with the US President making some critical comments about the recently EU-approved withdrawal agreement, which he said ‘sounds like a great deal for the EU’.
Trump further added:
‘Right now as the deal stands they may not be able to trade with the US and I don’t think they want that at all, that would be a very big negative for them.’
These comments put further pressure on May, as the Brexit deal is now facing its final – and most crucial – hurdle as it seeks approval from Parliament in the coming weeks.
The GBP/USD exchange rate is likely to come under increasing pressure, as any sceptical comments over May’s Brexit withdrawal agreement will weigh heavily on market sentiment in Sterling.
US Dollar Remains Strong against Sterling (USD/GBP) despite Weakening Safe-Haven Status
The US Dollar Pound (USD/GBP) exchange rate remains strong, although the US’ safe-haven status is beginning to show signs of weakening as demand for equities increases.
Today will see Vice-Chair of the Federal Reserve, Richard Clarida, deliver a speech in New York City, with investors in USD paying close attention to any dovish remarks that may indicate pausing interest rate hikes.
Of interest to investor’s will be Clarida’s comments that may hint towards a slowing down of interest rate hikes – with his recent comments suggesting that the Fed was reaching increasingly closer to ‘neutral’.
The US Dollar could face a boost from housing market data today, with the imminent release of the Housing Market Index for September expected to rise to 0.4% from last month’s 0.3%.
GBP/USD Exchange Rate Remains Focused on Brexit and G20 this Week
GBP/USD exchange rate looks set for further volatility, as comments from Donald Trump and British MPs increasingly throw May’s Brexit withdrawal agreement into doubt, damaging investor confidence in Sterling.
Wednesday will see the Bank of England (BoE) release its Financial Stability Report, which will provide an assessment of the stability of the financial sector.
With increasing political concerns over Brexit, it is expected that the outlook is likely to look dovish, with the UK economy presently in a state of uncertainty until the withdrawal agreement reaches some consensus.
Wednesday will also see the release of US economic data that could prove significant for the ‘Greenback’.
Q3 Gross Domestic Product is expected to remain unchanged at a level of 3.5% on an annualised basis, although any upside surprises will no doubt give USD rates a boost.
Overall the GBP/USD exchange rate is likely to be driven by political factors this week, with the important G20 summit on Friday, and trade tensions between US and China expected to be debated between President Trump and Chinese President Xi Jinping.