GBP/USD exchange rates edge lower due to UK economic data and US border security deal

GBP/USD exchange rates edge lower due to UK economic data and US border security deal

UK growth predicted to slow in 2019

UK economic data has been in the spotlight since the Bank of England last week announced there growth forecasts for the year ahead. The Governor Mark Carney predicted that growth this year will be the slowest since 2009 and blamed the uncertainty of Brexit as one of the key factors. To make things worse yesterday’s growth numbers released by the Office for National Statistics (ONS) showed growth numbers at 1.4% which was down by 0.4%. With the UK economy slowing, this is a key concern for clients that are converting sterling into US dollars in the short term.

US border security deal

Across the Atlantic, Republicans and Democrats appear to have reached an agreement in principle over border security and in particular the wall that will separate the US and Mexico. By agreeing a deal in principle reports are suggesting that another Government shutdown is unlikely, which bodes well for clients that are selling US dollars to buy pounds.

Earlier in the year President Donald Trump’s partial shutdown lasted 35 days and was the longest in history. According to Forbes the shutdown cost the US Government $11bn, which just shows the importance of this deal in principle.

Theresa May to brief MPs on the state of the Brexit negotiations

Looking further ahead, it’s an important day for UK Prime Minister Theresa May. The PM will be back in the House of Commons briefing fellow MPs on the state of the Brexit negotiations. Unless she has been keeping updates from the media, there isn’t much to report as no party has come up with a solution for the Irish backstop. Therefore I expect the PM to come under further scrutiny and MPs will continue to claim she is running down the clock, which could put pressure on sterling.

As for economic data Governor of the Bank of England will be deliver a speech around midday and later in the afternoon Fed Chair Jerome Powell will also give a speech. Both central bankers will highlight the state of the UK and US economy which in turn could provide volatile trading periods.

After the economic data releases we have seen for the UK over the last week, I find it difficult to see how Mark Carney can be upbeat. However any nod to the border security from the Fed Chair could be seen as a positive for the US dollar.

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