Pound Sterling to US Dollar (GBP/USD) Exchange Rate Sinks as Brexit Deal Opposition Continues ahead of mid-November Deadline

The Pound (GBP) slumped this morning following the Friday resignation of UK Transport Minister Jo Johnson, who quit the cabinet in opposition to the “irrevocably stupid” Brexit negotiations.

This type of domestic turmoil is stunting confidence in Theresa May’s ability to produce an effective Brexit plan in time for a proposed EU summit, which in turn is frustrated by a previously-slated mid-November deadline.

Due to the uncertainty of Brexit once again dominating the headlines investors have quickly forgotten last week’s spell of optimism, and Pound sentiment has dropped accordingly, hitting GBP/USD.

GBP/USD Exchange Rate Drops 1% as Brexit Plans in Disarray

The GBP/USD pairing fell around 1% today after a number of cabinet ministers voiced opposition to Theresa May’s Brexit plans, leading some analysts to concede that Brexit will be the main driving force for the Pound over the upcoming months.

The GBP/USD exchange rate could take a further hit later on today when San Francisco Federal Reserve head Mary Daly gives a speech relating to regional economic development.

If she drops any hawkish comments about the likely path of rate hikes over the next year the Pound could take a renewed knock against the Dollar.

USD/GBP Exchange Rate on Bullish Form as Dollar Rides High on US Economic Performance

The US Dollar (USD) is on bullish form following last week’s hawkishness from the Federal Reserve in response to the  latest strong economic data.

Recent USD strength has been due to the Federal Reserve’s programme of rate hikes covering 2018-2019, which has given the ‘Greenback’ the upper hand over many of the other majors, including the Euro, which has been beset by a range of problems from weakening growth and Brexit, to the Italian budget impasse and the struggle to normalise monetary policy.

By contrast, the Pound (GBP) continues to fight an uphill battle as the looking threat of a no-deal Brexit keeps investors wary of the UK currency.

GBP/USD Exchange Rate Outlook: US Inflation Data in Focus

As debate continues this week over Brexit, it remains to be seen whether there will be any progress on the matter, particularly with thorny issues such as the Irish border backstop unresolved, meaning the pound (GBP) is likely to remain under pressure against the US Dollar (USD) this week.

In terms of data releases the latest US Consumer Price Index figures will be coming out on Wednesday, which could bolster the US Dollar further as economists currently forecast a 2.2% rise year-on-year for the month of October, which would be a strong result – albeit an unchanged one from the previous month.

Before then, tomorrow’s UK wage figures may also provide  some further insight into UK consumer spending power, with any positive surprises liable to give the GBP/USD exchange rate a lift.