Volatility expected for GBP/USD rates as UK Parliament returns from summer break this week
The pound to US dollar exchange rate has remained range-bound as of late. Now that MPs have returned to Parliament from there summer breaks, Prime Minister Boris Johnson has issued a stark warning. The Prime Minister has made it clear that if a Conservative MP votes against him in a bid to block a no-deal Brexit this week, then they will be banned from running at the next election. Reports are suggesting that the speaker John Bercow could allow Jeremy Corbyn to take over the Commons agenda if Conservative MPs support him.
Volatility should be expected for clients converting GBP/USD. If Jeremy Corbyn takes over and some Conservative MPs are banished this is going to pave a way for another General election. History tells us a General election puts pressure on the currency due to the uncertainty it creates. However, in this specific example, the chances of crashing out short term will dissipate therefore the pound could actually strengthen. Over the last 3 years Brexit has had a major impact on sterling exchange rates and could be expected to continue this week.
US China trade war: Further trade tariffs
Across the Atlantic, the trade war escalated between the US and China as President Trump started another faze of tariffs on imports coming from China. No surprises the Chinese have retaliated calling Trump a bully and he should act more responsibly. An interesting piece of research by JP Morgan is suggesting that previous US tariffs are costing the average American $1,000 dollars a year. If this stat is proved to be true and makes headline news will this be used against the President in the next election Campaign?
The key data releases to look out for this week are the US ISM manufacturing numbers Tuesday afternoon, ISM non manufacturing Thursday afternoon and Nonfarm Payroll coupled with Unemployment numbers for August. To find out more information in regards to how the data may impact your currency exchange feel free to fill in the form below.