The Pound US Dollar exchange rate has fluctuated recently as a result of Brexit concerns, but this movement could become negative in the future if the UK and EU cannot reach an agreement.
Ever since German media reported that Theresa May and European Commission President Jean-Claude Juncker had argued at a Downing Street dinner, insults have been flying back and forth between the UK and EU.
May escalated the situation by declaring that;
‘The European commission’s negotiating stance has hardened. Threats against Britain have been issued by European politicians and officials. All of these acts have been deliberately timed to affect the result of the general election which will take place on June 8th’.
Since this extraordinary claim, EU officials have denied such action, while European Council President Donald Tusk attempted to prevent any further deterioration in relations;
‘[Brexit] negotiations are difficult enough as they are. If we start arguing before they even begin, they will become impossible’.
Juncker has remained testy, stating that ‘English is losing importance in Europe’ and that;
‘It is not the EU that is abandoning the UK – it is the UK that’s abandoning the EU, and that makes a difference’.
Should the situation worsen even further in the weeks to come, the GBP USD exchange rate may fall sharply on fears of EU officials making a bad Brexit deal to ‘punish’ the UK.
Future US Dollar movement could come from efforts to repeal and replace the Affordable Healthcare Act.
A bill with this purpose scraped through the House of Representatives on May 4th, but still needs to be passed by the Senate.
Republican senators have already indicated that they will not accept the bill in its current form, instead taking its essence and writing a new bill.
This could entail a ‘watering down’ of the bill, with aspects dropped to prevent rejection by senators.
If the bill is ultimately passed, the US Dollar may slide in value, as it could represent the first of many Trump plans actually being passed into law.
On the other hand, if the bill is radically different from its initial form then US Dollar traders could be reassured that Trump’s more controversial plans will be tempered, which may boost USD.
Recent Interbank GBP USD Exchange Rates
At the time of writing, the Pound to US Dollar (GBP USD) exchange rate was trading up at 1.29 and the US Dollar to Pound (USD GBP) exchange rate was trading down at 0.77.
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