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Pound US dollar exchange rate: GBP edges higher after nosediving on Brexit fears


But the exchange rate still has long way to go to recover the losses suffered at the end of last week.

The pound is edging higher against the US dollar and the majority of its other peers this morning, but remains in a precarious position following on from the beating it took at the end of last week’s session.

The pound US dollar exchange rate nosedived over two cents on Friday, suffering its largest single day losses so far this year following a breakdown in Brexit negotiations between the UK and EU at a summit of leaders in Salzburg.

These losses were then exacerbated by Prime Minister Theresa May’s defiant statement on Friday afternoon, in which she asserted “no deal is better than a bad deal”, reigniting fears the UK could leave the EU without a deal.

While the pound appears buoyed this morning by some optimism from Brexit minister Dominic Raab that a deal is still attainable, the considerable risks of a no-deal Brexit is likely to leave many investors wary over the coming weeks. 

At the same time, while the US dollar is currently down against the pound it is advancing against all its other major peers as safe-haven demand surges once again.

This comes as China cancelled its upcoming trade talks with the US, with Beijing refusing to negotiate in the face of escalating tariffs as it accused Washington of engaging in ‘trade bullying’.

While China stated its desire to find a reasonable outcome to the US-China trade dispute, it warned talks would not be possible unless they are “based on mutual respect and equality.”

Looking ahead, the focus for investors this week is likely to be on the Federal Reserve’s latest policy meeting.

This is widely expected to result in the central bank voting to raise interest rates for the third time this year.

Further movement in the US dollar is likely to be driven by the tone of the Fed’s policy statement.

Meanwhile a run of low impact UK data releases is likely to see Brexit remain as the main catalyst for movement in the pound this week, potentially resulting in further losses should sentiment continue to sour.



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