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Pound US dollar exchange rate: GBP steady against USD as Brexit battle continues


In positive news for the pound, EU leaders have voiced support for Prime Minister Theresa May’s efforts in creating a viable Brexit deal following the Brussels summit.

French President Emmanuel Macron offered support to May’s Brexit plan.

He said: “It’s no longer a technical issue, it’s for the political ability of the UK to reach an agreement that can be presented to us.

“Mrs May has been extremely committed and I’m convinced she will work in finding a political solution to get back to the EU negotiators.”

Similarly, European Council President Donald Tusk has backed an extension of the Brexit transition period.

He said: “If the UK decided that an extension of the transition period would be helpful to reach a deal, I am sure that the leaders would be ready to consider it positively.”

The idea of keeping the UK in the EU for longer than necessary is controversial, for while it would reduce the chances of a no-deal Brexit, it has been condemned by pro-Brexit MPs.

Less positively, UK economic analysts have warned that there might be sustained damage from Brexit uncertainty over the winter.

ING Developed Markets Economist James Smith has warned that UK businesses and households might struggle during the upcoming cold spell.

He said: “For the economy, this could see growth momentum slow again over the winter as uncertainty rises.

“With businesses becoming more vocal about the impact ‘no-deal’ would have on operations, households may begin to take a more cautious stance if they gradually become more wary about their job security.”

On the other side of the currency pairing, US dollar demand has fallen following remarks from Federal Reserve policymaker James Bullard.

Speaking on Thursday, Mr Bullard advised against raising US interest rates further, which has unsettled US dollar traders looking for a fourth rate hike this year.

While Mr Bullard is not voting on US interest rates in 2018, his cautious outlook has still weakened the US dollar as it puts the idea of multiple rate hikes in 2019 into question.

The last economic events of the week will be speeches from central bankers – pound traders will be keeping an ear on remarks from Bank of England (BoE) Governor Mark Carney.

Mr Carney is due to speak at an event in New York this afternoon and he could trigger a pound to US dollar exchange rate rise if he backs raising UK interest rates in 2019.

Similarly, if Federal Reserve policymakers Robert Kaplan and Raphael Bostic support more interest rate hikes next year then the US dollar could appreciate.



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