March 18, 2019 - Written by John Cameron
STORY LINK Pound to Dollar Exchange Rate: GBP/USD Plummets as Speaker Rules Out Third Same Meaningful Vote
The Pound to US Dollar (GBP/USD) exchange rate is down by nearly 0.8% today and is currently trading around $1.3195 on the inter-bank market.
Sterling (GBP) has struggled against the US Dollar (USD) today as Prime Minister Theresa May once again attempts to gain support for her Brexit deal from both the DUP and rebel Tory MPs ahead of a possible vote on Wednesday.
This third ‘meaningful vote’ however is conditional on whether she can gain the DUP’s backing, and with this increasingly looking unlikely it is weighing heavily on market confidence in Sterling.
23 Tory Brexiteers have said, in a joint statement, that they will reject Theresa May’s Brexit deal as it now stands, saying:
‘We believe that, if Britain leaves the European Union as planned on March 29, “no deal” will prove to be the precursor to a very good deal indeed. Now, “hard/real” Brexit has been redefined as a “catastrophic no-deal Brexit” and purportedly removed from the table by a parliament of remainers who hold a country with a majority of Leavers in contempt.’
USD/GBP Exchange Rate Rises Despite Poor Economic Data
The US Dollar has benefited from a weaker Pound today despite poor US economic data on Friday, which showed that US manufacturing output fell for a second consecutive month.
Friday also saw worse-than-expected New York factory data which further lowered confidence in US economic growth for the first-quarter.
Many ‘Greenback’ traders, however, are worried that this negative economic trend could lead to a dovish Federal Reserve monetary policy statement following the interest rate decision on Wednesday.
GBP/USD Exchange Rate Falls as ‘Realistic Prospect’ for May’s Third Deal Fades
Pound traders are focusing on a possibility of a long delay to Brexit today if there is no ‘realistic prospect’ of her third attempt at securing a deal this week.
Theresa May’s spokesman said:
‘She is focused on conversations she is having with MPs, talks with the DUP and what we very firmly want to be in is a position where we can pass the vote this week.’
However, as many Tory MPs are unlikely to vote for May’s deal if there are no concessions regarding the Irish backstop, this has discouraged market confidence in the Pound today. 23 Torys have come forward in a group statement, saying:
‘Our moral course is clear: it is not our fault that we are confronted by two unacceptable choices, but it will be our fault if we cast a positive vote in favour of either for fear of the other.’
GBP/USD Forecast: Sterling Could Recover on Signs of a Brexit Extension
Pound traders will be looking ahead to the publication of the UK average earnings figures excluding bonus figures for January tomorrow, which are expected to hold steady at 3.4%.
These will be followed by the printing of the UK ILO unemployment rate figures for January, which could benefit Sterling on any signs of an increase.
US Dollar investors, meanwhile, will be paying attention to the US factory order figures for January tomorrow, which are expected to increase at 0.3%.
The GBP/USD exchange rate will remain sensitive to Brexit developments this week, and with any signs of a possible extension to Brexit, this could see the Pound begin to recover.
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