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Pound US Dollar (GBP/USD) Exchange Rate Steadies as US Fed Shows Signs of Dovishness

April 16, 2019 - Written by John Cameron

GBP/USD Exchange Rate Rangebound as Brexit Cross-Party Talks Stall

The Pound US Dollar (GBP/USD) exchange rate steadied today and is currently trading around $1.3090 on the inter-bank market.

The US Dollar (USD) stabilised against the Pound (GBP) as traders are becoming more cautious as the US Federal Reserve has indicated an increasingly dovish stance.

This came following Monday evening’s speech by Charles Evans, the Chicago Federal Reserve President, who said he would be comfortable to hold interest rates until autumn 2020.

Many ‘Greenback’ traders will be awaiting this evening’s talk by Robert Kaplan, the President of the Federal Reserve Bank of Dallas, for any further signs of a dovish Fed.

The Pound steadied against the ‘Greenback’ as Brexit news has come to a stall as many MPs are on holiday for the parliamentary Easter recess.

In UK political news, Conservative MPs have become increasingly critical of cross-party talks with Labour, seeing the opposition party as being disinterested in avoiding partaking in the important EU summit.

This came after the Foreign Secretary, Jeremy Hunt, called it an ‘absolute priority’ for the UK to avoid the European elections, seeing it as disastrous for Theresa May’s position as Prime Minister.

USD/GBP Exchange Rate Stabilises as Trump is Optimistic to ‘Win’ US-China Trade Deal

Today will also see the publication of the US industrial production figures for March, which are expected to improve.

However, on-going US-China trade talks are weighing on the US Dollar today as hopes are growing that the two superpowers can secure a trade deal. This has had many traders fleeing the ‘Greenback’ for riskier assets.

President Donald Trump remained optimistic during yesterday’s visit to Minnesota, saying:

‘We’re going to win either way. We either win by getting a deal or we win by not getting a deal.’

GBP/USD Exchange Rate Flat as UK Unemployment at 44-Year Low

The Pound, meanwhile, failed to benefit from the publication of the UK ILO unemployment rate figures for February, which held at 3.9% – a 44-year low.

Alok Sharma, the Minister of State Employment, remained optimistic however, saying:

‘The UK jobs market continues to go from strength to strength, proving the underlying resilience of the British economy.’

‘But we must not take this for granted. We need to work urgently to get behind a Brexit deal that protects this jobs record and gives employers the certainty to continue to invest in their workforce and boost wages.’

GBP/USD Forecast: Sterling Could Improve on a Cross-Party Brexit Consensus

Pound traders are looking ahead to tomorrow’s publication of the UK Consumer Price Index figures for March, which are expected to rise.

These will be followed by the UK Retail Price Index figures for March, and with any signs of improvement this could see Sterling gain against the US Dollar.

Tomorrow will also see as speech by the Bank of England’s Governor, Mark Carney. Pound traders will be taking careful note of any comments on the state of the UK economy.

US Dollar investors will be awaiting tomorrow’s printing of the US trade balance figures for February.

The GBP/USD exchange rate will remain dictated by Brexit developments this week, and any indications that cross-party talks could provide an alternative to the current political deadlock could provide some uplift for the Pound.

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