The Queen grants Boris Johnson’s request to suspend parliament: How have Pound to US Dollar rates been affected?
The pound to US dollar exchange rate is seeing another wave of volatility after UK Prime Minister Boris Johnson confirmed he will prorogue parliament from 9th September until 14th September. In a move that has infuriated those that wish to remain in the European Union the decision is aimed to stop those MP’s plotting to legislate against the government to stop a no deal Brexit from happening. It effectively reduces the prospects of legislation being put in place to stop a no deal. Boris Johnson stated that “should I succeed in agreeing a deal with the EU, parliament will then have the opportunity to pass the Bill required for ratification of the deal ahead of 31st October. Rates for GBP vs USD have fallen below 1.22 for the pair although the reaction yesterday was somewhat limited considering the media attention the decision received. Those with pending requirements looking to either buy or sell dollars would be wise to plan ahead as the Brexit deadline of 31st October counts down.
Trump issues further tariffs on Chinese goods
The US dollar meanwhile retains its safe haven status after President Donald Trump imposed an additional 5% on existing tariffs on Chinese goods. Trump reportedly revealed that the decision had resulted in China wishing to “get back to the table” and discuss trade. Expect more volatility on the back of any trade developments whilst tensions on trade are running high. China is currently seeing its slowest economic expansion in the last 30 years as trade woes continue to weigh heavy on the economy. It will be interesting to see whether China does come forward and agree to some of the US’s requests on trade.
US Fed interest rate decision next month
The US Federal Reserve will next meet 17th-18th September for the latest interest rate decision. The last meeting showed members had different views on whether to cut rates by 25 or 50 basis points. Expect more volatility in the run up to the meeting as the markets speculate on whether there will be another 0.25% rate cut. US Gross Domestic Product data is released this week and the expectation is that the numbers will fall lower from 2.1% to 2%. Any major changes could help persuade the central bank to take additional action at the September meeting which could see market reaction for GBP/USD especially if the central bank decides to cut more aggressively.
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