US Dollar to British Pound Exchange Rate Forecast Advances amid Trump Jitters

Modified: Tuesday, 31 January 2017 16:37 BST - Written by Ben Hughes

STORY LINK US Dollar to British Pound Exchange Rate Forecast Advances amid Trump Jitters

The US Dollar to British Pound exchange rate plunged on Tuesday afternoon as the Pound strengthened while the US Dollar was undermined by the latest Trump jitters and US economic concerns.

Tuesday afternoon’s US consumer confidence results from January disappointed investors, falling to 111.8 despite being predicted to come in at a stronger 113. While the figure was broadly solid, it worsened market concerns that the Trump administration would not enjoy a ‘honeymoon’ period from consumers.

[Previously updated 30/01/2017]

The US Dollar to British Pound exchange rate advanced on Monday as Sterling was kept pressured by ongoing concerns of post-Brexit trade while jittery investors firmed in the ‘safe haven’ US Dollar following high uncertainty during the new US Trump administration.

USD/GBP tumbled from 0.8080 to 0.7967 last week, falling further from this month’s three-decade-high of 0.8338.

US Dollar (USD) Firms as Investors Seek out Safe Havens

While the US Dollar weakened last week on uncertainty about the Trump Presidency and underwhelming US Gross Domestic Product (GDP) figures, investors firmed in the currency on Monday.

US President Trump issued a controversial executive order over the weekend, barring those flying from several Muslim-heavy countries from access to the US for a minimum of 90 days.


The order sparked criticism from various politicians and business leaders and led analysts to fear that the US was closing itself off to vital skilled immigrants.

Despite being a US issue, the demand for ‘safe haven’ currencies that followed as investors looked to avoid losses saw the US Dollar rise regardless.

Pound (GBP) Weakens on Fear of Weaker UK-US Relations

Before the latest controversial Trump move emerged, analysts were feeling generally optimistic about the future on UK-US relations.

UK Prime Minister Theresa May met with Trump during Friday’s American session and things appeared to go smoothly, with May claiming that Trump supported NATO ‘100%’ despite his previous criticism of the group.

However, no details emerged on any possible UK-US trade talks and analyst hopes for stronger ties began to fade following the Trump ‘Muslim ban’ too.

Theresa May has been swamped with calls from UK politicians to condemn Trump’s actions and even reject an invitation for Trump to visit Britain. While Downing Street has stated Trump’s visit will not be rejected, investors are increasingly concerned that UK-US relations could quickly sour.

USD/GBP Forecast: Central Bank Decisions the Week

Investors are likely to react to this week’s influential US data and central bank decisions regardless of underlying uncertainty about the US Trump Presidency.

Tuesday will see the publication of UK data such as December’s consumer credit and mortgage approvals figures.

Key US data will also be published on Tuesday, including Q4 employment cost figures and January’s highly anticipated consumer confidence print.

Economic sector figures will be published on Wednesday, including US manufacturing PMI. However, the main event will be the Federal Reserve’s first policy decision of 2017.

Britain’s ‘Super Thursday’ will follow with the Bank of England (BoE) holding its own first policy decision of 2017, as well as a press conference from BoE Governor Mark Carney.

However, the underlying anxiety and uncertainty in US and UK markets lately could prevent either the US Dollar or Pound from heavily benefiting.

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