GBPUSD Slips Away from 9 Month High

Pound to Dollar Rate Choppy Ahead of BoE Meeting

The pound to dollar exchange rate has drifted lower today after what has been an incredible week of volatility for the GBP USD pairing, with all the latest political developments in the UK surrounding Brexit. Rates for GBP USD have risen to a 9 month high creating a good opportunity to buy dollars. After a series of votes in the British Parliament this week the markets are still none the wiser, although it is evident that the risk of a no deal Brexit is starting to look less likely even though there does still remain a chance it could happen.

The markets will now focus on a third meaningful vote (MV3) to be held next week on the current withdrawal agreement. Developments on how to withdraw from the backstop, if it ever came into force, are expected from the UK attorney general Geoffrey Cox. These could pave the way for support from the Democratic Unionist Party and the European Research Group (ERG). Any political statements today and over the course of the weekend could see a big market reaction as we potentially draw closer to the end of these Brexit negotiations.

The Bank of England (BoE) will meet next Thursday to discuss interest rates, although with the pending Brexit date of the 29th March so close, it’s likely that the Central Bank will not take any action next week.

The GBPUSD exchange rate has been given a further boost after weaker economic data in the US had a negative impact on the dollar. US initial jobless claims saw a rise in the number of those claiming benefits, which correspond to the US non-farm pay roll numbers last Friday. US non-farm pay rolls took a nose dive and have sent a clear message that the US economy could be set for a downturn. The weakness in the Chinese economy and concerns over global growth are both weighing slightly heavier on the dollar at the moment. Other indicators are also starting to slide, including the US housing market, which is expected to remain sluggish through the first half of 2019. Where the dollar heads next will very much depend on any breakthroughs in the ongoing trade talks between the US and China.

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