Pound to US Dollar forecast: How will the Brexit negotiations affect GBP/USD exchange rates?

Pound to US Dollar Pulls Back as Market Bulls Pause

Brexit and trade wars cause GBP/USD volatility

Pound to US dollar exchange rates have been volatile on the continued uncertainty in the currency market that relates to Brexit and the Trade Wars. These two events have seen excessive volatility in the currency market, as the markets scrambles to make sense of the latest news.

This week saw Boris Johnson proroguing parliament, which caused the pound to initially drop but it has since recovered. Expectations are for the uncertainty relating to continue, with next week’s reconvening of parliament expected to be a big draw.

The current expectation is that we will see the pound continuing to be under pressure, as investors struggle to make sense of what lies ahead. Boris Johnson’s move has set the tone for conflict ahead as he has tried to ensure Brexit of some description will happen.

What may stop this is the clear opposition to the Brexit plans tabled by Johnson and the government. Next week could be a defining moment on Brexit, and whilst the pound to US dollar level is being influenced by many other situations, we know how sensitive the pound has been on Brexit news.

US trade tensions with China: Could the Fed cut interest rates further?

On the US dollar side, the continuing trade tensions are creating a lack of clarity on the outlook, with expected increases in the tensions likely to lead to the US Federal Reserve cutting interest rates. The US Fed, which is the US central bank, have made clear that if the trade uncertainties continue then they may well be looking to cut interest rates ahead.

Further expectations are for the GBP/USD level to be in focus next week, with the latest US Non-Farm Payroll data, which will provide insight into how the US economy is faring. This will be another factor to drive the market next week, topping off what looks like a very interesting first week of September ahead for GBP/USD levels.

If you have a transfer ahead on GBP/USD, please feel free to contact our team of currency specialists to discuss the latest currency news and events.