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Pound US Dollar (GBP/USD) Exchange Rate Steady, Jeremy Corbyn Backs Pre-Christmas General Election

October 29, 2019 - Written by John Cameron

GBP/USD Exchange Rate Rangebound, Boris Johnson Pushes for December Election

The Pound US Dollar (GBP/USD) exchange rate held steady at around $1.286 today after Labour Party leader Jeremy Corbyn announced that the party was now ready to back a pre-Christmas general election.

Mr Corbyn said:

‘We have now heard from the EU that the extension of article 50 to 31 January has been confirmed, so for the next three months, our condition of taking no-deal off the table has now been met.… We will now launch the most ambitious and radical campaign for real change our country has ever seen.’

Now that it is now highly likely that Prime Minister Boris Johnson will secure a majority in this evening’s fourth attempt at securing a snap election on December 12, we could see the GBP/USD exchange rate begin to fall on heightened Brexit uncertainty.

In UK ecostats, today saw September’s UK consumer credit figure fall to a 5-year low at £0.828 billion, with British consumer remaining cautious on the ongoing political confusion around Brexit.

USD/GBP Exchange Rate Steady, Federal Reserve Rate Cut Fears Haunt US Markets

The US Dollar (USD) held steady against the Pound (GBP) following today’s release of August’s US Case-Shiller home prices indices, which fell below consensus and held steady at 2%.

However, US markets are remaining cautious ahead of tomorrow’s interest rate decision from the Federal Reserve, which is expected to be cut from 2% to 1.75%. ‘Greenback’ traders are remaining jittery with fears that Fed policymakers could be dovish about the US economy.

Michael Feroli, an Economist at JPMorgan Chase, was however upbeat in his analysis, saying:

‘We think it’s very unlikely [the Fed’s policy committee] will disappoint the market.’

Meanwhile, John Donaldson, a Director at Haverford Trust Co., was critical of the Fed’s likely manoeuvre:

‘After the next cut, the fed funds rate would re-enter the zone where there is no evidence that further cuts help the economy. If ultra-low rates and negative rates are such a panacea, why aren’t Japan and Germany growing at 6% rather than teetering on recessions?’

US Dollar traders will be awaiting this afternoon’s release of September’s US pending home sales figure, which is expected to improve by 0.9%. As a result, we could see the ‘Greenback’ begin to edge higher against the Pound.

GBP/USD Outlook: Could Sterling Sink on December Election Vote Success?

Brexit developments will dominate GBP/USD exchange rate movement this week, with any signs of Boris Johnson securing a majority vote this evening likely weakening the Pound.

Meanwhile, the US Federal Reserve’s monetary policy statement will remain in focus tomorrow. Any signs of a dovishness about the US economy could weaken the USD/GBP exchange rate.

US Dollar investors will also be looking ahead to tomorrow’s flash US growth figure for the third quarter, which is expected to ease from 2% to 1.7%.

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