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GBP/USD Today - The Pound to US Dollar Exchange Rate Finds Support on Hopes of Brexit Extension

April 5, 2019 - Written by Frank Davies

The Pound to Dollar exchange rate found some support after Theresa May submitted a request to extend the Brexit deadline until the end of June 2019.

With European Council President Donald Tusk encouraging leaders to approve a so-called flexible extension to the Brexit deadline the odds of a no-deal Brexit appeared to ease.

Although it remains to be seen whether the two sides can agree any potential extension to the deadline this still helped GBP exchange rates regain their footing ahead of the weekend.

This increased sense of market optimism also helped to overshadow the weakness of the latest Halifax house price index, which showed a -1.6% decline in prices on the month.

US Dollar (USD) Exchange Rates Soften Ahead of US Labour Market Data

Support for the US Dollar, meanwhile, proved limited as investors assumed positions in anticipation of March’s non-farm payrolls report.

After February’s unexpectedly weak showing investors are wary of another month of underwhelming labour market data, limiting the strength of USD exchange rates.

If the headline employment figure shows an increase of 180,000 on the month as forecast, though, the GBP/USD exchange rate is likely to come under renewed pressure.

Improving wage growth should also offer support to the US Dollar ahead of the weekend, even though the Federal Reserve still looks set to leave interest rates on hold for the foreseeable future.

GBP/USD Exchange Rate Remains Vulnerable to Brexit Speculation

Brexit developments look set to dominate the outlook of the GBP/USD exchange rate in the days ahead as markets await news on any potential deadline extension.

Ongoing discussions between Theresa May and the Labour leadership could offer support to the Pound, as long as markets see reason to hope for a Brexit compromise.

If the sense of uncertainty over Brexit persists, however, this is likely to drive the Pound lower across the board once again.

Unless the two sides avoid the UK exiting the EU without a deal on Friday GBP exchange rates could struggle to find any footing in the days ahead.

Contracting US Factory Orders to Weigh on US Dollar (USD) Exchange Rates

As forecasts point towards a contraction in February’s US factory orders the US Dollar may come under fresh pressure on Monday.

Fresh signs of weakness within the US economy would give investors renewed incentive to sell out of the US Dollar, with confidence in the health of the manufacturing sector already limited.

Even if the US and China agree a fresh trade deal in the days ahead, easing the recent bout of trade tensions, USD exchange rates could still falter on the back of another underwhelming data release.

As long as the world’s largest economy continues to show evidence of a loss of momentum the GBP/USD exchange rate is likely to benefit.
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