industry

Pound US dollar exchange rate: GBP under pressure despite Fed lowering economic outlook


The pound enjoyed a bit of a respite yesterday from its recent weakness against the dollar, rising on the lack of any fresh Brexit shocks with GBP traders adopting the mantra “no news is good news”.

Its ascent was aided by comments from US Federal Reserve Vice-Chair Richard Clarida who had earlier sounded a dovish note on the pace of interest hikes the Fed could adopt going forwards.

Mr Clarida raised the prospect that the Fed could pause interest rates in 2019 when he said there was “some evidence” that the world economy was slowing, and that US interest rates are “in the vicinity” of neutral.

Neutral interest rates would indicate that they have risen to match the level of inflation, meaning any further increases would begin to eat into consumers’ purchasing power.

POUND LIVE: LATEST GBP STERLING MOVEMENT HERE

His comments sent the US dollar lower across the markets.

Brexit appears to be on the back burner today as far as currency traders are concerned, despite the latest headlines indicating further trouble ahead for Theresa May’s divorce agreement with the EU.

The latest obstacle comes from the Democratic Unionist Party (DUP) – whose 10 MPs prop up Mrs May’s government – indicating that they cannot support any ‘backstop’ agreement that would cut off Northern Ireland from the rest of the UK.

While this would likely scupper Mrs May’s attempts to get her Brexit agreement through Parliament in its current form, pound traders have instead chosen to focus on news that a rebellion by pro-Brexit Tories to unseat the Prime Minister in a no-confidence motion seems to have flopped.

As a result, the pound is relatively stable on currency markets today, with traders waiting to hear if Bank of England (BoE) Governor Mark Carney makes any reference to the impact caused by the recent Brexit chaos on the central bank’s future plans for monetary policy.

Mr Carney is appearing at the same time an influential inflation report is put before a Treasury Select Committee in Parliament, with the report liable to influence bets on the BoE’s rate hike strategy in 2019.

On the US side of things, today is a quiet data day, although some housing data due out this afternoon will provide an indication of how the sector is faring.

Monthly housing starts in the US are expected to show an uptick to 1.225m for the month of October after the previous month’s noteworthy 5.3 per cent decline.

If this proves accurate, and in the absence of any further Brexit news, we can expect to see the pound US dollar exchange rate slip further today.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.