The Pound remains in a weak position against the US Dollar with levels hovering around 1.31 for the GBP USD pair. All eyes now focus on Fridays US Gross Domestic Product (GDP) numbers which are keenly monitored by the US Federal Reserve. GDP is expected to climb higher to 2.3% up from 2.2% and some of the other accompanying data is expected to be positive.
A strong number could see a good end to the week for the Dollar. Despite the fears of the current trade wars escalating further the Dollar is shrugging off any such concerns. The US Dollar is for the moment benefitting from those trade policy decisions from Donald Trump and this is a classic example of when investors flock to the safety of the Dollar.
Meanwhile in the UK Parliament is about to start the summer recess which means that it will be a little bit of a wait for any further Brexit updates. Whilst there may be some developments over the holidays, any breakthrough announcements or the possibility of a no deal scenario are unlikely to arrive until Parliament returns. Those clients looking to buy Dollars with Pounds have been left in a weaker position after the recent tensions in Government over Brexit and due to the fact that there have been a number of high profile resignations from within the Conservative Party.
It is for these reasons that the Pound is likely to remain at these weaker levels for the upcoming period especially whilst the economic data is not as consistent as the Bank of England would like. After last week’s weaker inflation data the offs of seeing that interest rate increase in August have been dramatically cut. The markets were pricing in the chance of a rate hike of about 70-80% although that number will now be much lower and this is keeping pressure on the Pound. There is of course an excellent opportunity for selling Dollars at present although any change in tact from the US President could see things turn rather quickly.
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