USD GBP Exchange Rate Slumps after Trump Communications Director Quits

May 30, 2017 - Written by Ben Hughes

STORY LINK USD GBP Exchange Rate Slumps after Trump Communications Director Quits

The US Dollar-damaging headline has been that Michael Dubke, the Trump administration’s Communications Director, has quit. The news comes as Trump returns from his first international tour, having passed through the Middle East and Europe on a whistle-stop visit.

Dubke’s surprise resignation may be just the first of many removals and reshuffles in the White House, as the President is supposedly planning a major shakeup in his first days back.

Expectations are that along with potential hirings and firings, the post-tour administration could have less press briefings but more direct messages from the President himself.

Trump is also predicted to undertake more overseas visits, which could potentially lead to more diplomatic friction with other world leaders.

Dubke’s resignation and forecasts about the ‘new’ administration only add to uncertainty that stemmed from Trump’s overseas visit, where he riled NATO leaders and refused to commit to the Paris climate change deal.

The US Dollar could hit fresh weekly low against the Pound today, when Federal Reserve official Lael Brainard speaks. Brainard is considered a cautious policymaker, which may mean that she pours cold water on the idea of a June interest rate hike.

Such an outcome could shatter USD demand, as it would go against high hopes for a US rate hike in the coming month.

The Pound’s rise against the US Dollar is mainly due to USD weakness, although UK confidence has gradually been building regardless.

Traders have mainly been focusing on the impact of a televised question session for Theresa May and Jeremy Corbyn, who were not directly debating with each other.

Under fire from Jeremy Paxman and the studio audience, both election candidates were thought to have performed equally. This verdict still caused some Pound gains, as it was concluded that with no net polling change, the Conservatives could still be in the lead once polling resumed.

Summarising the night’s events was Guardian Political Correspondent Andrew Sparrow;

‘The May v Corbyn showdown did illustrate how the campaign is evolving. At the start of the campaign, some of Corbyn’s critics thought he would be so awful that the Labour campaign would collapse. This evening, he looked relaxed and confident.

May seems to have changed a bit, too. When she called the election, her campaign seemed to revolve entirely around offering “strong and stable” leadership. The social care U-turn has torn the legs off that strategy, and tonight she barely, if at all, used the phrase. Instead, we got a more humble and grounded PM, who sounded evasive on social care and winter fuel payments, but robust on Brexit, which many people will like’.

Asides from any poll-related movement, the Pound is next expected to shift when Wednesday’s GfK consumer confidence score is released. This is forecast to show falling confidence in May, which could sap Pound demand.

Other weekly UK data could also weaken the GBP USD exchange rate, as UK manufacturing and construction activity is forecast to slow. The PMI results, out on Thursday and Friday, are predicted to show lower activity in April. This would start the second economic quarter off poorly.

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