Pound US Dollar (GBP/USD) Exchange Rate Slips as Pressure Mounts on Brexit ?Plan B? Ahead of Vote

January 24, 2019 - Written by John Cameron

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Slips as Pressure Mounts on Brexit ?Plan B? Ahead of Vote

GBP/USD Exchange Rate Drops as Brexit Tensions Mount on ‘Plan B’ after Barnier Warning

The Pound US Dollar (GBP/USD) exchange rate is down today and is currently trading around $1.3046 on the inter-bank market.

The Pound (GBP) failed to make any gains on the US Dollar (USD) with the absence of any notable UK data releases to provide uplift for Sterling amid continuing Brexit volatility.

Increasing pressure on Prime Minister Theresa May over her ‘Plan B’ and the House of Commons has come from Michel Barnier, the Chief Brexit Negotiator for the EU, who said that the two Brexit options were May’s deal or a no-deal – dampening some traders’ appetite for Sterling.

The Pound was also left unmoved by comments from Conservative Brexiteer Jacob Rees-Mogg who said he would support Theresa May’s deal.

Rees-Mogg said:

‘I think there is hope that there could be reformation of this deal to make it more acceptable.’

US Dollar (USD) Pound Exchange Rate Rises despite Pelosi Cancelling Trump’s Address during Shutdown

The US Dollar, meanwhile, has gained on the Pound today despite the on-going partial government shutdown nearing the end of its fifth week.

Tensions between the House Speaker Nancy Pelosi and President Donald Trump are increasing, as Pelosi denied Trump’s use of the House Chamber for his State of the Union speech yesterday, lowering USD sentiment.

Trump tweeted:

‘As the Shutdown was going on, Nancy Pelosi asked me to give the State of the Union Address. I agreed. She then changed her mind because of the Shutdown, suggesting a later date. This is her prerogative - I will do the Address when the Shutdown is over.’

Today will see the publication of a raft of US data stats, with the most significant being the US PMI figures for January which are expected to decrease, potentially limiting some of the ‘Greenback’s gains on the Pound.

The US continuing jobless claims figures for January are expected to decrease, which could provide some support.

A US Senate vote on the continuing government shutdown is due to take place today, although hopes are slim that they will end the impasse – leaving many US investors remaining cautious.

GBP/USD Outlook: Brexit and US Government Shutdown in Spotlight

Sterling investors will be paying close attention to Brexit developments this week, and with no significant UK data releases to lend support to the Pound for the rest of the week, any signs of Theresa May’s ‘Plan B’ struggling to gain Parliamentary approval ahead of next week’s vote could see the Pound slide further against the ‘Greenback’.

USD investors will also be focusing on any signs of an end to the US government shutdown this week, and although a compromise is seemingly increasingly unlikely, any further signs of a concession between the White House and the House of Representatives could ease some pressure on the ‘Greenback’.

Friday, meanwhile, will see the publication of the UK BBA mortgage approvals figures for December, with any signs of an increase potentially offering a little support for GBP.

The GBP/USD exchange rate will more likely be driven by political forces this week, with the US government shutdown and the on-going Brexit uncertainty dominating both currencies, however with any signs of the Brexit deadlock coming to an end ahead of next week, this could provide the Pound with some additional support.

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