The pound to US dollar rate has seen a boost to its value since hitting its lowest levels for almost 6-momths last week, when the pair fell as low as 1.2550 and found support at that level.
Pound to US dollar exchange rates influenced by Conservative Party leadership contest
Last week exchanging US dollars into pounds hit its most attractive level in almost 6-months, and since then sterling has managed to reverse its fortunes somewhat with the pair trading closer to 1.27 and 1.26 at the time of writing.
Whether or not the pound will continue to find support at this level, and perhaps even recover some of the losses seen in May remains to be seen, as there is little to prop up the pound’s value at the moment especially with uncertainty mounting regarding the next UK Prime Minister. Economic data out of the UK isn’t having as much of an impact as political updates for some time now, but especially at the moment as Prime Minister May will be steeping down shortly and the contest for the next leader of the Conservative Party will heat up from the 11th of June onwards.
Currency markets are likely to be influenced by who the favourites to become leader are, and at the time of writing there are 13 members of the party that have put their names forward for the position.
How is the US China trade war influencing cable exchange rates?
Outside of domestic politics and the Conservative Party leadership contest arises another potential market mover, this time from the US dollar side, could be the trade war between the US and China. China has so far attempted to compete with Trump in regards to the implementation of trade tariffs, and another topic to follow is the interest rate decisions taken by the Fed Reserve Bank. The Fed has adopted an aggressive approach over the last few years, and there is now talk of a rate cut from the central bank, so this could see the US dollar lose value and help GBP/USD climb.
If you would like to be kept updated regarding rates and whether 1.2550 remains a support level for cable, do feel free to register your interest with me.