Since the pound to US dollar rate broke 1.30 almost a month ago we’ve seen the pair remain rangebound between that level and 1.33 despite a number of key Brexit updates being announced during that time.
So far this morning we’ve seen sterling soften as concerns over a no-deal Brexit have resurfaced as there doesn’t appear to be another vote on UK Prime Minister May’s deal this week as was originally expected. The Speaker of the House of Commons John Bercow surprised the markets when he said that in order for another vote to take place there needs to be a amendments to the current deal. The expected departure date is now just 9 days away and despite no trade deal being in place the pound hasn’t sold off dramatically, as markets generally expect there to be no hard Brexit although as previously mentioned the possibility is once again becoming a concern.
There is the potential for us to see a steep sell off in the pound’s value if there is no extension to Article 50, as without trade arrangements in place there would be a shock to the UK economy.
With no major Brexit updates and the vote not taking place, focus on the GBP/USD pair could move to the US this week as there will be a policy update from the Federal Reserve Bank (Fed). The interest rate decision will take place tonight and no changes are expected although references to forward guidance from the Fed could impact the markets especially after some commentators have suggested the recent rate hikes has cooled the US economy. Tomorrow afternoon will then see the Bank of England (BoE) take their turn as they will announce their interest rate decision in the afternoon, along with the minutes afterwards which will offer an insight into their plans.
An EU Summit will also take place on Thursday, which could move markets as the topic of whether or not EU leaders all agree to a Brexit extension will be discussed. With such a busy week of data and updates there could be movement for GBP/USD pushing the pair outside of the current ranges discussed earlier, so do feel free to register your interest if you wish to be updated if the market moves.