Could GBP/USD Rates be Heading Below 1.25 by Christmas?

Could GBP/USD Rates be Heading Below 1.25 by Christmas

GBP/USD rates hit a low of 1.26571 overnight and despite the Pound recovering back above 1.27 during early morning trading, Sterling is currently showing no signs of making any real inroads against the greenback.

In truth, the Pound has been marooned under 1.30 for a prolonged period and even when it has managed to put pressure on this key threshold, it has failed to sustain its position.

This is not overly surprising when you consider the relative health and outlook for each economy. The US is seemingly going from strength-to-strength, whilst the UK continues to find itself pulled from pillar to post amidst on-going Brexit tensions.

Much of the media’s focus has now switched to the upcoming Brexit vote, which will take place in the House of Commons next Tuesday 11th December. This is when MPs will vote on whether to approve UK Prime Minister Theresa May’s Brexit deal with the EU.

The current feeling is that MPs may well vote against it, which if true, could leave the UK is a very unenviable position, which could possibly end up resulting in a no-deal Brexit.

This is considered by the majority to be the worst outcome for the UK economy, as it would leave us without any trade agreement with our closest neighbours, but also leave us in global economic limbo with the rest of the world.

Looking at the US economy and things look far healthier on the other side of the Atlantic, despite oil prices dropping and concerns over President Trump’s trade stand-off with China. In fact, even this escalating situation has been cooled with the US and China agreeing on a ceasefire whilst further negotiations take place.

Whilst the situation is yet to be fully resolved, any indication that there has been a breakthrough in talks regarding a long-term agreement between the two powerhouses, could help support further USD strength and we could see Cable head back below 1.25 before the end of the year.

Feel free to get in touch using the form below if you’d like to hear more about GBP/USD rates, I’ll be happy to get back in touch personally.