The USD continues to find plenty of support against GBP, with the pound struggling to make any advancement back towards 1.30.
This level has become a key threshold for GBP/USD rates in recent times, with the current economic climate restricting any major advancements for the pound.
UK Prime Minister is still trying to find some common Brexit ground with Labour, with talks resuming yesterday between the UK’s two leading political parties. UK Prime Minister Theresa May hopes that these talks will finally break the current deadlock and help to advance Brexit talks.
In truth, an agreement looks as far away as it has ever done, with a growing expectation that talks will continue right up towards the revised deadline at the end of October.
This lack of clarity over the UK’s final Brexit position is sapping investors risk appetite in sterling, which is one of the reasons for the pounds current predicament.
This negative perception of the UK economy, coupled with a strong US economy, is ultimately defining the current trend on Cable. It is the major contributing factor to the current value of the pound and until this uncertainty is removed, I am struggling to see how the pound will be able to advance significantly from its current position.
This does not mean however, that the pound cannot make a run back towards and even above 1.30 in the short-term but this is likely to be dependent on some positive reports regarding the current Brexit talks.
With the US economy continuing to outperform most analysts’ expectations, despite many predicting a slowdown during the first two quarters of 2019, it will be interesting to see whether it can continue to produce such positive growth figures.
If economic output were to slow over the coming weeks, this would help to alleviate some of the pressure which has been building on GBP and may help to facilitate an upward spike for the pound.
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