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Pound US Dollar (GBP/USD) Exchange Rate Sinks as US Housing Price Figures Improve

June 25, 2019 - Written by John Cameron

GBP/USD Exchange Rate Falls as US-China Trade Talk Optimism Rises

The Pound US Dollar (GBP/USD) exchange rate eased today and is currently trading around $1.2724 on the interbank market.

The US Dollar (USD) edged higher against the Pound (GBP) following the publication of the US Housing Price Index figures for April, which rose above the expected 0.2% to 0.4%.

However, these were followed by the annual S&P/Case-Shiller Home Price Indices for April, which fell below consensus to 2.5%, leaving some ‘Greenback’ traders feeling jittery.

Global political news, however, is remaining in focus with the US to put sanctions on Iran.

The Oval Office said that these were ‘a strong and proportionate response to Iran’s increasingly provocative actions.’

Meanwhile, US-China trade talks are in focus, as hopes rise that President Donald Trump and his Chinese counterpart, Xi Jinping, could potentially secure a trade deal by the end of the week during their G20 meeting.

Zhu Feng, a Professor of International Relations at Nanjing University, however, remained cautious.

He said:

‘The leaders are expected to show a rational and cooperative attitude when they meet again and agree to restart suspended trade talks… Frankly, I am not sure if it will happen any time soon.’

GBP/USD Exchange Rate Decreased as Boris Johnson Heightens No-Deal Brexit Fears

The Pound fell following the publication of the UK CBI Distributive Trades Survey figures for June, which fell by -42%.

Alpesh Paleja, a Principal Economist at CBI, urged cautious, however, saying:

‘This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup.’

UK political news, however, has remained in focus today with Boris Johnson, the Tory hopeful for the next Prime Minister of Britain, has returned to the media spotlight following a generally low-key campaign.

Brexit fears have risen, however, following comments from Mr Johnson that the UK would leave the EU on 31 October ‘do or die’ – which has been generally interpreted as meaning deal or no-deal.

He urged optimism, however, adding:

‘Let’s be more positive about this. It’s time this country stopped being so down about its ability to get this done.’

GBP/USD Outlook: Sterling Could Weaken on Increased No-Deal Jitters

Sterling traders will be looking ahead to tomorrows’ speech by Mark Carney, the Governor of the Bank of England.

Any further comments of a dovish nature would likely prove Pound-negative.

Tomorrow will also see the UK inflation report hearings from the Treasury Committee.

US Dollar investors, meanwhile, will be focusing on the Nondefense Capital Goods Orders excluding Aircraft figures for May tomorrow, which are expected to improve at 0.1%.

These will be followed by the US Durable Goods orders figures, which are also expected to provide some uplift for the USD/GBP exchange rate.

The Pound US Dollar exchange rate will, however, remain sensitive to political developments, and with any indications that Boris Johnson could further support a no-deal Brexit, this could see Sterling traders become increasingly skittish.

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