Breaking News all over the World

Breaking Finance News – Pound US dollar exchange rate: GBP sheds last week’s gains against USD

THE pound US dollar exchange rate is trending at around $1.282 after reversing all of the gains made last week. The exchange rate has already lost over a cent this week, and is well below last Thursday’s multi-week-high of $1.303.

The US dollar has easily capitalised on fresh Brexit jitters, against general higher market demand for ‘safe haven’ currencies.

On top of a broadly stronger US dollar, the primary reason for the pound to US dollar exchange rate’s tumble has been fresh fears about disagreements between UK and EU Brexit negotiators.

Theresa May has said the government intends to hold its ground on its Brexit blueprint, despite criticism from EU Chief Negotiator Michel Barnier over some aspects of the plan.

Mr Barnier reminded reporters that the UK would not be able to pick and choose parts of the single market. 

His criticism led to concerns that the UK and EU were still struggling to overcome key issues in negotiations, which has kept significant pressure on Sterling.

The pound has seen further downside pressure today too, in the form of Britain’s latest construction PMI. 

The construction report was forecast to slide from 55.8 to 55.0, but unexpectedly slumped to 52.9.

Meanwhile, a resurgent US dollar has been able to capitalise on the pound’s weakness. 

Investors have been pouring into the US dollar again as demand for safe havens escalates.

With trade tensions between the US and China worsening again, and US-Canada trade talks having fallen through, currency traders have been cautious about risk exposure once again.

And with the US economic outlook looking solid following Donald Trump’s tax and trade reforms, the US dollar is the most appealing currency for investors seeking safety.

Looking ahead, it’s possible the pound to US dollar exchange rate will fall further if Brexit fears continue to worsen.

Upcoming data could also prove influential. The UK services PMI could drive the pound on Wednesday, as services are the most important element of the UK economy.

If the data impresses, it could help the pound avoid further losses against the US dollar.

The US dollar, on the other hand, could weaken if investors shrug off their risk fears, or if trade and Non-Farm Payroll data, due in the second half of the week, disappoint.


Leave a Reply

Notify of