Pound US Dollar (GBP/USD) Exchange Rate Slips as Tory MPs Threaten to Resign, US-China Trade Talks Continue

February 22, 2019 - Written by John Cameron

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Slips as Tory MPs Threaten to Resign, US-China Trade Talks Continue

GBP/USD Exchange Rate Slips as Brexit Stalemate Weighs on Pound

The Pound US Dollar exchange rate is down today and is currently trading at $1.3020.

Sterling (GBP) weakened against the US Dollar (USD) today as the Brexit stalemate continues, with Prime Minister Theresa May facing increasing pressure as members within her party are threatening resignations if a no-deal Brexit is not removed from the table.

Meanwhile, Trump will meet China’s Vice Premier Liu Hue in Washington today to continue US-China trade talks as they wrap up for the week ahead of the 1 March ‘trade truce’ deadline.

James Athey, a Senior Investment Manager at Aberdeen Standard Investments, remained cautious. He stated:

‘There's obviously an incentive for both sides to reach a deal… The problem is that you're now getting to the more difficult part of the negotiation, which is things like the IP (intellectual property) problem.’

USD also edged higher on the Pound today despite continuing US domestic political tensions. House Democrats continue to push forward with a bill to block President Donald Trump’s declaration of a national emergency over illegal immigration.

However, there is a lack of significant US data releases today, with many ‘Greenback’ traders instead paying close attention to political developments both domestically and with regard the US-China trade talks. Today will also see the publication of the Federal Reserve’s monetary policy report.

GBP/USD Exchange Rate Struggles as Ninth Labour MP Resigns, Tory MPs Threaten to Leave

Sterling traders are remaining particularly jittery today in reaction to the latest political developments, as the ninth Labour MP quit following a string of recent resignations.

Ian Austin, Labour MP of Dudley North, resigned today and said that the Labour party has become ‘broken’.

He further stated:

‘[T]he hard left is now in charge of the party.’

This has come following warnings to Theresa May that ‘dozens’ of loyal Tory MPs could also resign – or defiantly vote for an extension to Article 50 – next week if a no-deal Brexit is not removed from the table.

Tory MP Andrew Percy, along with fellow MP Simon Hart, said in a joint letter to government whips:

‘Not only does [a no-deal] risk damaging the national interest, but also... we are putting in jeopardy the very thing many colleagues have spent decades campaigning for; our exit from the European Union.’

GBP/USD Forecast: Pound Could Rise if Brexit No-Deal Threat is Removed

The GBP/USD exchange rate is likely to remain fixated on Brexit developments next week, with a parliamentary vote on Theresa May’s withdrawal deal expected to set the tone of developments going forward.

Any signs of a no-deal Brexit being removed from the table would be Pound-positive.

US-China trade developments and domestic political disputes will also remain in focus next week, with any signs of a compromise in either having an impact on the ‘Greenback’.

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