Wednesday afternoon has seen the Pound rise higher against the US Dollar, from an opening rate of 1.3399 to a more recent 1.3438.
Although US Q3 GDP has risen by more than forecast, current Federal Reserve Chair Janet Yellen has warned that the US faces difficulties from an aging population.
(First published November 29th, 2017)
The Pound has rallied against the US Dollar today, seeing a clear rise of 0.4% in the pairing.
Brexit news has greatly raised confidence in the Pound, while over in the US, the Dollar has failed to maintain a Fed-sourced rise.
Will GBP USD Advance Persist on Brexit Breakthrough Hopes?
The Pound has made major advances across the board today, having been strongly supported by news of an apparent Brexit breakthrough.
The UK government has seemingly offered to pay the EU more money as part of its ‘divorce bill’, which may be enough to break the current deadlock.
Talks have previously been stalled between the UK and EU, with neither party reaching an agreement on matters like the divorce bill and the status of the Irish border.
It is hoped that this pledge to pay a rumoured figure of £50bn will be enough to unstick negotiations, providing that it is enough to sate EU officials.
Reluctant to call this the breakthrough that some hope it will be, EU Chief Negotiator Michel Barnier has said;
‘We are still working…I am working for an agreement’.
An unnamed EU official also received the news with cautious optimism, stating;
‘We have heard the UK wants to come along with the money.
We have understood it covers the liabilities and what we consider the real commitments. But we have to see the fine print’.
Just what this “fine print” consists of will be key to future GBP movement, as the UK government may again have a caveat in place that sours the deal.
In the event that the UK side firmly commits to paying more to the EU, and that this causes an acceleration of talks, the Pound could rise even higher against the US Dollar.
US Dollar could Rebound if Future Fed Leader Commits to Inflation Strategy
The US Dollar appreciated on Tuesday afternoon, but has failed to hold its ground against a stronger Pound more recently.
Federal Reserve official Jerome Powell, soon to be the next Chair of the central bank, gave crowd-pleasing responses at his recent confirmation hearing.
While Powell backed a December interest rate hike, he was notably less clear about the future of US inflation rates.
The next leader stated that he was unsure of why US inflation has remained disappointingly low for years, which could threaten the three presumed US interest rate hikes in 2018.
If Powell makes clearer statements about his economic outlook, particularly with regards to inflation, then the US Dollar could regain lost ground and appreciate against the Pound.
Recent Interbank GBP USD Exchange Rates
At the time of writing, the Pound to US Dollar (GBP USD) exchange rate was trading at 1.3399 and the US Dollar to Pound (USD GBP) exchange rate was trading at 0.7462.
Comments are closed.