Pound to Dollar Forecast: Brexit Fears and US Government Shutdown Driving GBP/USD rates

GBP USD Exchange Rate: The Week Ahead December 20th

In today’s Pound to Dollar forecast we look at the events that could impact exchange rates in the short term. GBP/USD exchange rates have open the week trading in the mid 1.28s, as the markets await further information regarding Brexit and the on-going US government shutdown.

Despite UK Prime Minister Theresa May losing her key Brexit vote last week and just surviving a vote of no confidence in her leadership, the Pound still managed to make some inroads against the US Dollar. Despite these gains being fairly modest, it did seem as though we may have the 1.30 resistance level tested for the first time in 2019.

Whilst the USD ultimately found plenty of support just under this threshold, it was interested to see the gains made in the face of what can be only be viewed as a disastrous week for the PM and her current Brexit stance.

With the current standoff between MPs showing no sign of wilting and rumours of senior ministers trying to take control of Brexit through various legislation, the current uncertainty looks set to continue for the foreseeable future. Therefore looking at last week’s developments on the GBP/USD rate, it is clear that investors are likely becoming concerned about the on-going shutdown in parts of the US government and the possible longer-term negative ramifications it might have on the US economy.

The shutdown, which is entering its 31st day is now the longest on record. The ongoing dispute is over funding for President Trump’s US-Mexico border wall and with the Democrats nor President Trump seemingly willing to budge, the markets concerns continue to grow.

It has even been suggested that the disruptions, which are affecting over 800,000 federal workers, could be hindering 0.1% of the countries growth every week.

How this particular situation develops, along with Theresa May’s ability to push some type of Brexit deal before the deadline on March 29th, will likely determine how GBP/USD rates will evolve over the coming weeks and months.

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