The Pound US Dollar (GBP USD) exchange rate continued to fluctuate this morning as markets remain skittish ahead of the UK election tomorrow.
Pound (GBP) Volatile on Eve of UK General Election
Sterling has become increasingly unstable over the past week as election uncertainty weighs heavily on the currency.
Recent polls have done little to aid this as suggest that result of the election could be anything from a landslide victory for the Conservatives to a hung parliament that leaves Theresa May in a weaker position than before she called the election.
The Pound has been largely punished by the recent polling data however as any suggestion of a smaller or non-existent majority for the Tories causes dismay amongst investors as they fear that a weakened Conservative government will be less effective when it comes to negotiating the UK’s split with the EU.
US Dollar (USD) Weakens as Comey Set to Testify to Congress on Thursday
The US Dollar has also been shaken over the last couple of days as markets brace for the former FBI Chief, James Comey testimonial in front of Congress tomorrow.
Comey is expected to discuss allegations that President Trump pressured him to halt an investigation into former national security adviser, Michael T. Flynn over his ties with Russia, shortly before Trump fired him.
Markets fear that yet another scandal for Trump will likely delay his stimulus plans and tax reforms even further as his legislative agenda is overshadowed by controversy yet again.
GBP USD Forecast: UK Election Result to Dictate Sterling Sentiment Ahead of Brexit
Looking ahead markets are of course going to be focused on the outcome of the UK general election on Thursday, with the GBP USD exchange rate likely to tumble on Friday morning if investors wake up to find that the UK has a hung parliament.
However investors are also likely to begin turning their focus to the upcoming Brexit negotiations which are set to get underway by the end of the month, with the election result likely to influence market sentiment towards the process.
Meanwhile the US Dollar is likely to advance next week following the latest Federal Reserve policy meeting in which the central bank is widely predicted to vote to raise interest rates for the second time this year.
However the ‘Greenback’s gains may be tempered somewhat if a dovish Fed outlook raises questions over the implementation of a third hike this year.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.2901 and the USD GBP exchange rate was trending around 0.7752.
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