Pound to US Dollar forecast: Progress in US/China Trade War

GBP USD Exchange Rate: The Month Ahead September 

Could there be an end in sight for trade tariffs?

It has now been confirmed that the Trump administration has agreed to postpone an increase in tariffs on Chinese imports as trade negotiations seem to be making progress. This has seen the US Dollar make gains against the Pound.

The Wall Street Journal reported on Sunday that the two countries are close to the final stages of talks. If this is confirmed it will likely result in further US Dollar strength. If you have a trade involving USD it would be wise to keep an eye on developments as they unfold.

There are rumours circulating that Chinese President, Xi Jinping and US President, Donald Trump could meet later this month in a bid to end the trade war, following 12 months of tariffs. The suggested date for the meeting is 27th March.

US economic data points to a slowdown

US data has showed a slowdown of late following last year’s impressive growth coupled with several interest rate hikes from the Federal Reserve. US GDP fell 2.6% annualised in Quarter four of 2018 and the Federal Reserve have suggested that inflation could fall further below the Fed’s 2% target. This is concerning and were it not for Brexit I think Sterling could be making gains against the US Dollar.

Pound to US Dollar forecast: Are we looking at a Brexit extension?

Brexit remains the key factor on GBP/USD rates and the news of a potential extension to the Brexit deadline caused GBP/USD to hit an 8 month high last week.

The next key date will be when May’s current Brexit deal is voted on in Parliament. It is likely to be held on 12th March and I anticipate it will fail as she has yet to gain concessions from Brussels on the Irish border. If the vote does fail the following day MPs will vote on whether they are willing to leave the EU without a deal, which I believe will also not be passed. We will then move on to a third vote on whether there will be an extension to Article 50, which I believe will be approved. This, although being priced into rates to some extent could cause gains for the Pound.

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