GBP/USD Exchange Rate ahead of Brexit Cabinet Meeting

Pound to Euro exchange rate: GBP/EUR rate hits best level since early June

The outlook for the GBP/USD exchange rate

The pound has rallied considerably higher this week against the US dollar on renewed confidence that a Brexit deal will be reached. Over the last two weeks there has been a movement of almost 5 cents in GBP/USD exchange rate which equated to a difference of $9,000 on a £200,000 transfer.

GBP/USD rates have now broken over 1.30 once again after a deal on Brexit was agreed yesterday between the EU and UK. An emergency cabinet meeting will be held this afternoon at 2pm for approval from cabinet. If agreed then the wheels will start moving very quickly. Depending on the outcome of today’s cabinet meeting there will likely be considerable volatility for the GBP/USD exchange rate.

Important cabinet meeting the focus for GBP/USD exchange rate

Today’s cabinet meeting is expected to last three hours, so there should be some market reaction in late afternoon trading today. This could set the future path for GBP/USD exchange rates. Subject to approval the Prime Minister will then go public to the country to outline the deal with a press conference expected tomorrow evening. There are risks for GBP/USD rates ahead though. Even if cabinet agrees the deal it will still have to go through Parliament and this is perhaps where the biggest hurdle lies.

There are many politicians who will vote against the Government if the deal is not right and this could see considerable pressure put on GBP exchange rates. Former Brexit Secretary David Davis even hinted in recent weeks that he expected the deal to be voted down in Parliament. A meaningful vote is expected to be held in the middle of December and in my view this will be a make or break time as to whether or not there is a deal for Brexit.

Will the US Federal Reserve raised interest rates in December?

The US Federal Reserve held interest rates last week and focus is now moving towards the December meeting where it is expected the Fed will raise US interest rates again. In the run up to the event the US Fed will be closely monitoring the economic data to help decide whether to stay on course for further interest rate increases.

Consumer spending data is released this afternoon and should give clues as to the strength of the American consumer. US retail sales are released tomorrow, although the ongoing Brexit discussions and British politics will almost certainly overshadow these economic data releases with potential opportunity for those looking to buy or sell dollars.

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