Historic Lows for GBP USD Exchange Rate after PM May?s Article 50 Statement

Modified: Monday, 3 October 2016 16:05 BST - Written by James Fuller

STORY LINK Historic Lows for GBP USD Exchange Rate after PM May?s Article 50 Statement

Pound Sterling Exchange Rate Recap: GBP/USD Falls to Almost 31-Year Low on Article 50 Concerns

During Monday’s European trading session, the Pound has utterly failed to rise against the US Dollar, owing to a strong, prolonged negative reaction to the weekend’s UK developments.

The issue has been the trigger date of Article 50, which will start the UK on a path to leaving the EU. This has been confirmed by Prime Minister Theresa May as coming in Q1 2017.

Although this period had been suggested by other sources, with the news coming straight from the horse’s mouth, investors have been severely panicked by the fact that a timer is now counting down until a period where intense volatility is likely.

Pound Sterling Future Forecast: UK PMIs In Focus This Week

While most of Monday’s UK economic activity was focused on the Article 50 fallout, the September manufacturing PMI result actually printed positively during the morning, above forecasts.

Further UK PMIs are due over Tuesday and Wednesday, consisting of construction and services results respectively.

While the construction result is expected to show a Pound-supporting rise from contraction back to growth, the more-important services figure has a decline on the cards, from 52.9 to 52.5.

US Dollar (USD) Exchange Rate Update: Fluctuations Come after Divided US Manufacturing PMIs

The US Dollar has been a more mixed option than the Pound during Monday’s trading, with sizable gains against the Pound and New Zealand Dollar coming alongside a loss against the South African Rand and tight trendings elsewhere.

For the ‘Buck’, this slight uncertainty in exchange rates has been triggered by the outcome of the Markit and ISM manufacturing PMIs for September, which have respectively fallen and risen.

In both cases, a final figure indicating growth has been recorded, although other US news has included the detrimental fact that construction spending in August has fallen by -0.7%, down from a prior -0.3%.

US Dollar (USD) Outlook: Fed Speeches and Further US PMIs Ahead

The next major US economic announcements likely to impact the GBP USD exchange rate will come over Tuesday and Wednesday, ahead of the week’s closing high-impact unemployment and change in non-farm payrolls results.

Tuesday’s news will be a speech during the afternoon from Fed official Jeffrey Lacker, while another Fed speech from Charles Evans will open Wednesday’s initial trading. Also due over Wednesday will be comments from Fed member Neel Kashkari, as well as further closing remarks from Lacker again.

Non speech-based events on Wednesday will include the Markit composite and services PMIs for September, as well as ISM non-manufacturing results for the same month. With the Markit PMIs, gains are forecast for both sectors.

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