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The Pound to Dollar (GBP/USD) Exchange Rate Dips as UK House Prices Slow

December 7, 2018 - Written by John Cameron

The Pound US Dollar (GBP/USD) exchange rate is down, and is currently trading at $1.2749, as the UK’s Halifax house prices figures for November fell to a six-year low rate of growth today.

GBP has remained sensitive to Brexit developments as Prime Minister Theresa May rallies to gain support for her UK-EU withdrawal agreement.

GBP found little strength against USD today, despite yesterday’s release of the US trade balance for October showing a significant drop at -5.55bn – a -0.9bn decrease on September’s figure.

This came after the reigniting of US-China trade tensions as the arrest of Huawei’s chief financial officer, Meng Wanzhou, yesterday, hit markets.

GBP/USD Exchange Rates Rangebound as Brexit Occupies Market Attention

Today saw the release of the UK’s Halifax house prices figures for November, which revealed a -1.4% drop.

Nationwide’s chief executive, Joe Garner, blamed Brexit as a contributing factor, further commenting:

‘House prices remain relatively stable . . . [We're] not predicting any major change to that, but the available stock of housing in the market is pretty much at an all-time low.’

Today’s release of the UK’s consumer inflation expectations figures lent some support to GBP, as they showed an increase.

However, markets remained cautious as the 11 December vote on Theresa May’s Brexit withdrawal agreement looms closer, with the former Brexit Secretary, Dominic Raab, commenting:

‘She has got to be willing finally to say to Brussels ‘no’. If she can do that then she can still turn this round.’

US Dollar Pound (USD/GBP) Exchange Rate Rises despite No-Farm Payrolls Figures Plunging below Expectations

USD steadied against the Pound (GBP) after yesterday’s release of the US ISM non-manufacturing PMI for November, which showed a bullish increase against last month’s figures.

However, today saw the release of November’s non-farm payrolls figures which showed a worse-than-expected decrease at 155K – down -82K on last month’s figures.

This came at the same time as November’s average hourly earnings for November, which remained static at 3.1%.

Unemployment figures for November also remained static at 3.7%, as did average hourly earnings for the same month, at 0.2%.

USD investors will have their sights set on the consumer credit change figures for October, which are released later on today and are expected to show a marked uptick.

GBP/USD Outlook: UK GDP and Brexit on the Horizon

The GBP/USD exchange rate is likely to be driven by political forces next week, with Brexit increasingly taking the spotlight as Theresa May rallies to gain support for her Brexit withdrawal agreement ahead of 11 December’s crucial Commons vote.

The US-China trade tensions are likely to remain in ‘Greenback’ investors’ focus this week, with recent risk developments spooking markets.

Looking forward, next week the US will see the release of its consumer price index for November on Wednesday, with any notable increase likely to strengthen USD.

This will be followed by a speech by the Chair of the Federal Reserve, Jerome Powell, with USD investors taking particular note of any mention of the global risk outlook or a slowing down of the US economy.

Meanwhile GBP investors will be awaiting the release of the UK’s GDP figures for October on Monday, with the potential of GBP/USD being buoyed if it increases.

The UK will also receive news from the European Court of Justice regarding Article 50 on Monday, which may quell market concerns over a possible chaotic Brexit ahead of Tuesday’s Brexit vote.

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