The Pound has fallen even lower against the US Dollar with levels fast approaching 1.30 for the GBP USD pair. This is really due to a combination of Sterling weakness stemming from uncertainty in the ongoing Brexit negotiations and Dollar strength as a result of US President Donald Trump’s trade policies.
Today and tomorrow are going to be hugely important for Sterling exchange rates with the EU summit. Although EU immigration policy will be the main point of discussion, Friday has been earmarked for an update on Brexit and any statements from the UK and EU are likely to have a direct impact on the price of Sterling and hence the GBP USD pair. Whilst I am positive for the Pound in the medium to long term I struggle to see any material gains for Sterling with such a long way to go by all sides in these negotiations. Prime Minister Theresa May will be holding a meeting at the country retreat Chequers on 6th July and considerable detail is expected as is a white paper on the governments strategy. If the summit this week doesn’t provide any real new information then next week could give us the detail everyone is looking for and the market reaction.
US Gross Domestic Product (GDP) figures are released this afternoon which is expected to hold steady at 2.2%. US GDP is considerably higher than UK GDP which highlights another reason why the Dollar is so strong against the Pound.
The week ends with UK GDP numbers tomorrow morning. Expectation is for a small pick up to 1.3% up from 1.2%. The retail sales data last week which saw a substantial boost were encouraging and help support the view that it is not all doom and gloom in the British economy. Anything positive for the growth outlook in the UK should help lift the Pound higher and could help steer the Bank of England to raise interest rates at the next meeting in August. Any shift in expectation for that next rate hike to happen in August rather than November could see a rally for the Pound.
For more information on Sterling exchange rates and how to make the most of any opportunities when making a transfer then please feel free to contact me, James at [email protected]