Pound Sterling US Dollar (GBP/USD) Exchange Rate Falls as US Announce Total Oil Embargo on Iran

April 23, 2019 - Written by John Cameron

STORY LINK Pound Sterling US Dollar (GBP/USD) Exchange Rate Falls as US Announce Total Oil Embargo on Iran

Pound US Dollar (GBP/USD) Exchange Rate Falls on Reports of Fourth ‘Meaningful Vote’

The Pound Sterling US Dollar (GBP/USD) exchange rate slipped and the pairing is currently trading at an inter-bank rate of $1.2952.

The Pound fell to a two-month low as reports circled that Theresa May could bring her Brexit deal back for a fourth ‘meaningful vote’ next week.

With no sign of a Brexit breakthrough, a fourth defeat looks likely and will cause further Brexit uncertainty.

This likely dampened sentiment in Sterling, causing it to drop below $1.30.

Pound US Dollar (USD) Edges up as US Attempt to Impose Total Oil Embargo on Iran

World oil prices rose to their highest since November following Washington’s announcement that all waivers on imports of sanctioned Iranian oil would end next week.

The White House stated that they were working with top oil exporters, the United Arab Emirates and Saudi Arabia to ensure there would not be a shortage.

However, Iran’s largest customer, China formally complained over the move, and a Chinese Foreign Ministry Spokesman said this ‘will contribute to volatility in the Middle East and in the international energy market.’

In response, Iran’s Oil Minister Bijan Zangeneh stated that the US has made a bad mistake by politicising oil and using it as a weapon.

He also suggested that the US would not achieve its dream of slashing exports of Iranian oil to zero.

It is likely the safe-haven US Dollar rose on the increased global tensions.

Pound (GBP) Falls Ahead of Further Cross-Party Discussions

Earlier on Tuesday, reports emerged that cross-party discussions between the Conservatives and Labour was due to continue.

However, there have been fresh calls for Theresa May to resign.

Commenting on this, leading backbencher Nigel Evans told BBC Radio 4:

‘The only way we’re going to break this impasse properly is if we have fresh leadership of the Conservative Party.

‘If there was an announcement today by the Prime Minister then of course we could start the process straight away.’

The 1922 Committee is due to meet later on Tuesday to discuss amending its rules, which currently says a leader cannot face a second no-confidence motion within twelve months of the last one.

There are suggestions that this could be shortened to six months, meaning Theresa May could face a contest in June.

US Dollar (USD) Rises despite Low Supply of Homes

Data showed that US home sales fell in March despite rising demand fuelled by slowing house price inflation and declining mortgage rates.

This was met by a lack of properties in the lower-priced segment of the housing market.

Commenting on this, Robert Frick, Corporate Economist at Navy Federal Credit Union, said:

‘Given mortgage rates have dropped and home prices aren’t appreciating as quickly, there is more opportunity for home shoppers, who are gearing up for the spring season.

‘The major problem for home buyers is the low supply of homes, especially at the lower end of the market.’

Pound US Dollar Outlook: Will the GBP/USD Exchange Rate Rise on Successful Cross-Party Talks?

If there are further developments that could lead to breaking Brexit deadlock in the House of Commons the Pound (GBP) could rise against the US Dollar (USD).

If cross-party talks are successful in finding a compromise, Sterling could rise against the ‘Greenback’.

Looking ahead to Thursday, the US Dollar could rise against the Pound following the release of the US non-defense capital goods orders excluding aircraft.

If goods orders rise in March following February’s contraction, the Pound US Dollar (GBP/USD) exchange rate could fall.

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