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Pound US Dollar (GBP/USD) Exchange Rate Sinks as Trump Says US-China Trade Deal Imminent

May 14, 2019 - Written by John Cameron

GBP/USD Exchange Rate Falls as Trump Eases US-China Trade Worries

The Pound US Dollar (GBP/USD) exchange rate is down by 0.4% today and is currently trading around $1.2919.

The US Dollar (USD) exchange rate rose against the Sterling following President Donald Trump’s announcement that the US and China would strike a deal, ‘when the time is right’.

Trump tweeted:

‘China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing. If the Federal Reserve ever did a ‘match,’ it would be game over, we win! In any event, China wants a deal!’

This has seen market confidence return in the ‘Greenback’ following China’s threat to rise tariffs on $60bn of US imports following the recent tensions between the two superpowers.

Today also saw the US NFIB Business Optimism Index figures for April, which increased above forecast at 103.5.

The Pound, meanwhile, has weakened as the two major parties are appearing to buckle in cross-party talks, with an increasing number of Tory MPs calling for Theresa May not to compromise with Labour leader Jeremy Corbyn.

GBP/USD Exchange Rate Sinks Despite 44-Year Low Unemployment Figures

Today saw the publication of the UK ILO unemployment rate figures for March, which came in at a 44-year low at 3.8%.

This, however, failed to benefit the Sterling as Brexit concerns have heightened on concerns on the two major parties failing to gain a parliamentary consensus for any forthcoming compromise deal.

These were also followed by the UK’s average earnings figures for March, which eased to 3.3%.

John McDonnell, the Shadow Chancellor, has commented that there has been no ‘significant shift’ in cross-party talks.

McDonnell commented:

‘[T]he customs union element is absolutely key to us. Our big problem now is if we're going to march our troops in Parliament to the top of the hill to vote for a deal and then that's overturned, literally, in weeks, I think that would be a cataclysmic act of bad faith.’

GBP/USD Outlook: Sterling Could Fall on Heightened No-Deal Brexit Fears

‘Greenback’ traders will be looking ahead to the release of the US retail sales figures for April tomorrow, which are expected to ease.

These will be followed by the publication of the US industrial production figures for April.

With no UK economic data due out tomorrow, most Sterling traders will be focusing on Brexit developments instead.

The GBP/USD exchange rate is likely to fall further if there is an increasing consensus that cross-party talks are breaking down, with the Sterling struggling as a fear of a no-deal Brexit become more likely.

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