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Concerning UK Trade Data Sends GBP USD Reeling

January 11, 2017 - Written by Ben Hughes

The Pound to US Dollar exchange rate fell from its best levels since Monday on Thursday afternoon as Sterling was weakened once more by the latest Brexit jitters.

Investors became anxious and jittery on the Pound as it was finally confirmed when UK Prime Minister Theresa May would hold high highly anticipated Brexit speech. Though the speech is supposedly intended to offer clarity, markets fear it will be another nail in the single market hopes coffin.

[Previously Updated 10/01/2017]

The GBP USD exchange rate reached fresh two-month lows this morning, sliding to its worst levels since the Sterling flash crash in October as the UK’s latest trade report disappointed investors.

Pound US Dollar (GBP USD) Trade Deficit Compound 'Brexit' Concerns



The Pound US Dollar (GBP USD) exchange rate continued its decline this morning following the release of the UK’s trade balance report.

Figures show that the UK’s trade deficit rocketed in November, rising from £1.5bn to nearly £4.2bn as the Office for National Statistics (ONS) reported that imports jumped by £3.3bn, with electronics like laptops seeing a significant rise.

The news added to the Pound’s recent woes following an interview with Prime Minister Theresa May over the weekend, in which she said that she was not interested in keeping ‘bits of [EU] membership’, which was widely interpreted by investors as a sign the government would not seek to retain access to the single market in 'Brexit' negotiations.

The fall in Sterling also comes despite an impressive rise across the board in UK production as Manufacturing, Construction and Industrial sectors all reported notable growth in November after slumping the month before.

US Dollar Falters Ahead of Trump Press Conference



The US Dollar's upward momentum has slowed this morning as markets await Donald Trump’s first press conference since becoming president-elect.

Investors will be hoping for a glimpse at what his economic plans are as they continue to speculate on how he plans to stimulate the economy and drive growth in the US job market. They will also hope to hear more about his trade plans as he frequently threatened to tear up a number of free trade agreements, which he blames for the demise of US industries in the so-called ‘rust belt’.

‘Greenback’ traders have become increasingly dovish recently as a cloud of uncertainty continues to hang over Trump's presidency, despite his inauguration being just over a week away.

Observers have become increasingly concerned about Trump's budding relationship with his counterpart in Russia, Vladimir Putin, and his wiliness to anger China in holding talks with Taiwanese President Tsai Ing-wens as it shows a marked deviation from current US foreign policy and breeds further uncertainty.

GBP USD Exchange Rate Forecast: US Jobless Claims Expected to Rise



The GBP USD exchange rate may see a slight lift tomorrow following the release of the latest US employment data, which is forecast to show that Continuing Jobless Claims grew from 2112k to 2118k in the last week of 2016.

However, the bump is unlikely to last long as an expected spike in US Retail Sales from 0.1% to 0.7% in December will likely cause the US Dollar to strengthen.

Meanwhile, a lull in UK domestic data for the remainder of the week is likely to hamper the Pound as there will be little to distract markets from their 'Brexit' concerns. There are currently predictions that the government may lose its Supreme Court battle, forcing it put the triggering of Article 50 to a vote in parliament.

Current Interbank Exchange Rates



At the time of writing the GBP/USD exchange rate was trending around 1.21 and the USD/GBP exchange rate was trending around 0.82.
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