Pound US Dollar (GBP/USD) Exchange Rate Eases as Jeremy Corbyn Rallies to Prevent a Disorderly Brexit

August 19, 2019 - Written by John Cameron

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Eases as Jeremy Corbyn Rallies to Prevent a Disorderly Brexit

GBP/USD Exchange Rate Falls as a Cross-Party Challenge Mounts against Boris Johnson

The Pound US Dollar (GBP/USD) exchange rate eased this morning, with the pairing trading around $1.212 as cross-party opposition against a no-deal Brexit in October has increased since last week.

This follows Labour leader Jeremy Corbyn’s call for cross-party MP solidarity against Prime Minister Boris Johnson in a bid to oust the Tory government and prevent a disorderly exist on October 31.

Shadow Chancellor John McDonnell, said:

‘There is a need now to bring MPs back together again because we need time now to really have a proper debate and discussion about this matter… I think there is a gaining majority now to say we have to go back to the people in some form of public vote and that is, in my view, a referendum, that’s the Labour party policy now.’

However, Sterling traders are remaining cautious as the likelihood of a no-confidence vote against Boris Johnson is perceived as being unlikely to gain a majority.

Today saw the publication of the year-on-year Rightmove House Price Index for August, which rose from -0.2% to 1.2%.

Rightmove Director Miles Shipside commented:

‘While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year.’

USD/GBP Exchange Rate Edges Higher as US Recession Fears Ease

The US Dollar (USD) edged higher as US-China trade negotiations take a positive turn, with White House Economic Advisor Larry Kudlow saying that trade talkers were ‘positive’.

Mr Kudlow also said that he does not see the US facing a recession in the near-term.

He said:

‘I don’t see a recession at all… Consumers are working. At higher wages. They are spending at a rapid pace. They’re actually saving also while they’re spending – that’s an ideal situation.’

As a result, the US Dollar has been buoyed on restored market optimism as fears of the economy facing a recession have been eased by Mr Kudlow’s comments.

US President Donald Trump has also played down fears of a recession, saying that the economy is doing ‘tremendously well’.

Mr Trump said:

‘Most economists actually say we are not going to have a recession. Most of them are saying we will not have a recession, but the rest of the world is not doing well like we are doing.’

GBP/USD Outlook: Federal Reserve Speech in Focus

US Dollar investors will be awaiting tomorrow’s speech by Randal Quarles, a Vice-Chair for Supervision at the Federal Board of Governors.

Any bullish comments about the US economy could further ease recession fear, boosting the USD/GBP exchange rate.

Sterling traders will be looking further ahead to Wednesday, which will see the printing of the UK public sector net borrowing figures for July.

The GBP/USD exchange rate is likely to remain subdued for the rest of this week as no-deal Brexit fears continue to hold back Sterling’s gains.

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