Pound to US Dollar rate: With fears of a US recession, will GBP/USD exchange rates fall below 1.20?

Pound to US Dollar rate With fears of a US recession, will GBP/USD exchange rates fall below 1.20?

Pound to US dollar exchange rates remain marooned in the low 1.20’s, with sterling struggling to make any substantial headway over recent days. The pound has seen its value slide further this week, trading under 1.21 at the time of writing, and is now trading perilously close to a 30-year low against the USD.

No deal prospect weighing on Sterling

There could be a direct correlation between the prospect of a no-deal Brexit increasing, and the pound’s value falling, with a number of news outlets now suggesting that the threat of a no-deal Brexit has increased to around 60%. These fears were substantiated yesterday following reports across most of the broadsheets that former Chancellor Philip Hammond has stated that Boris Johnson’s unrealistic demands from the EU are going to force the UK into a no-deal Brexit come the revised deadline of October 31st.

Hammond went on to say that MP’s can prevent Boris Johnson taking the UK out of the EU without a deal, calling no deal a “betrayal of the referendum” and suggesting advisors in Downing Street have no intention of negotiating a new deal.

The markets have indicated over recent months their distaste for a no deal Brexit, and the pound’s fall from grace is testament to this underlying sentiment.

USD outperforming expectations

Coupled with the USD’s impressive run, which has been facilitated by a US economy that continues to outperform expectation and the USD’s ability to hold its value in times of global uncertainty due to its “safe haven” status, perhaps the lofty heights the USD has reached should not be of such a surprise.

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