The Pound to US Dollar rate dropped last week for the third consecutive week, as Brexit sentiment begins to take its toll on the Pound’s value.
Sterling has dropped by over 2% over the past few weeks against the US dollar which reflects the markets feelings of uncertainty surrounding the UK economy moving forward. The announcement of future closures of Honda car manufacturing factories in the UK hasn’t helped either, even if the reasons behind the closures aren’t Brexit related.
The next likely market mover could be this morning’s UK labour market releases which will touch on the unemployment rate and also wage growth. Wage growth has been one of the stronger areas for the UK recently, which has helped prop up the Pound’s value to an extent as economic data releases continue to come under the microscope as the markets watch for the impact of Brexit. Earnings growth is expected to grow to 3.5%, up from the previous figure and if this continues there could be calls for a more bullish monetary policy to be adopted by the Bank of England.
Brexit talks are ongoing and there could be updates between now and the 27th of February, when the next ‘meaningful vote’ on UK Prime Minister, Theresa May’s Brexit deal is scheduled to take place. There could also be further updates that impact the market between now and March the 29th so those planning on making a currency exchange involving the Pound and the US Dollar should be aware of this.
Influences on the Pound to US Dollar rate
The US Dollar is being influenced by both President Trump’s push for funding for the wall he wishes to build, along with the ongoing saga of the US-China trade negotiations. Once both issues are addressed there is the potential for further US Dollar strength although the chances of interest rate hikes from the Federal Reserve Bank has now declined as the US economy has begun to show signs of cooling off.
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