Donald Trump has threatened to declare a ‘state of emergency’ in order to source extra funding that will allow him to obtain funds to build the wall. As a key campaign promise Donald Trump’s reputation is on the line, and his most vociferous backers have been putting real pressure on him meeting this key commitment.
The US Dollar strengthens while the Pound weakens
The US dollar has actually risen marginally against sterling, in part because of a weaker pound, but also because Trump, in pursuing this direction, should actually avoid a further government shutdown, a previously key source of US dollar weakness.
On the sterling side, the pound is weaker as the UK Parliament remains knotted over which direction Brexit will take. Last night 50 Conservative MPs voted against the Government and the Brexit Bill, in seeking to find solutions to deliver Brexit.
It appears Theresa May is very happy to ‘run down the clock’, whilst the no-deal option remains on the table. Investors with a position buying or selling US dollars for sterling might find some volatile days ahead as the market grapples with the latest news on both Brexit and also Trump and the Wall.
Important economic data today
Today is an important day of economic data for the UK and the US, this morning we have UK Retail Sales which will provide some direction on the latest performance of the UK economy. On the US side we have a series of Import and Export data this afternoon at 13.30 which might influence more short term movements.
Sterling could tread water against the US dollar until we have the latest news on Brexit which might not be until the 26th February, when MP’s have been promised a more meaningful vote on the government’s EU Withdrawal Bill.
Clients with a position to buy or sell US dollars for sterling could find they are in for a turbulent time ahead, I think the strategy to buy USD when above 1.30, but sell when below 1.30, remains relevant as we remain in a mixed pattern on the market.
If you have are looking to exchange GBP/USD and would like to request further information on the events that could impact rates, use the form below and I’ll be happy to respond personally.