Pound to US dollar exchange rates are now trading close to a 2 and a ½ year low, with the pound now trading under 1.22 on the interbank exchange against its US dollar counterpart.
Boris Johnson continues his ‘no deal’ rhetoric
The rhetoric around the UK potentially leaving the EU without a deal continues to intensify. Boris Johnson’s appointment as the new Prime Minister was met with mixed reactions, but since taking up the reigns he has laid out his Brexit position with stark clarity.
Johnson has said that he will not even entertain negotiating with the EU unless they make some serious concessions over the current Irish backstop arrangement, a key sticking point in negotiations between the EU and the previous UK government.
There could be a direct correlation between the threat of no deal growing and the pounds value falling, and as such it is no real surprise to see pound to US dollar exchange rates trading around the current lows.
USD remains strong: Concerns ahead as US China trade war continues
Looking at the US economy and despite a predicted slowdown for the second two quarters of 2019, the current economic output remains bullish. With a strong economy helping to support the USD’s recent rise, the key question is whether Brexit uncertainty and potentially a no-deal Brexit, has been priced into the current value on GBP/USD rates?
Only time will tell of course. It does however, seem as though the current UK government is taking a harder line on Brexit and are prepared to walk away without a deal being in place, should they feel that the terms being offered by the EU are not acceptable. Whilst concerns over the UK Brexit position are likely to continue, the US economy is not immune to its own prospective pitfalls.
With President Donald Trump announcing further tariffs on Chinese goods last week, Beijing have vowed to retaliate. Indeed, it may not be a coincidence that the Chinese currency fell to its lowest value against the USD in over 11 years this week. The Chinese government have also instructed their state buyers to stop buying US agricultural products, which is a further sign that the current trade standoff is unlikely to be resolved anytime soon.
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