GBP/USD Exchange Rate Wavers as Northern Ireland Protocol Deal Hits a Snag
The Pound US Dollar (GBP/USD) exchange rate is fluctuating as optimism over the Northern Ireland protocol deal being signed are fading.
At time of writing the GBP/USD exchange rate is around $1.2028, relatively unchanged from this morning.
Pound (GBP) Undermined by Renewed Brexit Fears
The Pound is trading listlessly this morning amid a lack of major economic data. Brexit-related headlines could be influencing proceedings as Prime Minister Rishi Sunak went to Belfast with optimism of a deal being struck early this week.
However, the likelihood of this happening now is fading. Sammy Wilson, Unionist party MP, who speaks on Brexit issues, has warned that there is a long way to go.
Looking ahead, and any further updates with the negotiations could influence the Pound. If an agreement can be struck, then Sterling could climb. If the UK and EU can reach an agreement, a potentially disastrous trade war would be averted.
Elsewhere, a speech from Bank of England (BoE) Deputy Governor Sam Woods could lift the Pound if he comments on how the central bank intends to continue raising interest rates to combat inflation.
US Dollar (USD) Supported by Geopolitical Tensions
Meanwhile, the US Dollar (USD) is left to trade on market sentiment as both the bond and stock markets are closed in observance of the President’s Day holiday.
However, with reports claiming that the US and Taiwan are to sign a bilateral trade agreement earlier than anticipated have soured market moods. The less than encouraging meeting between China and the US is also compounding matters. China’s Director of the Office of the Central Foreign Affairs Commission Wang Yi and US Secretary of State Antony Blinken also weighed on tensions. Despite directly involving the US, safe-haven flows could benefit the US Dollar as global market sentiment wavers on souring relations.
Looking ahead to tomorrow’s session, preliminary estimates of both manufacturing and services PMIs could influence the ‘Greenback’. Despite an expected improvement across both sectors, if manufacturing and services remain in contraction territory, USD could slip.
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