The Sterling spike
The pound to US dollar exchange rate has rallied higher after a huge boost over 48 hours at the end of last week. Sterling was boosted dramatically last week after a meeting with UK Prime Minister Boris Johnson and Irish Taoiseach Leo Varadkar when they suggested a deal was possible. It is not clear at this stage what concessions have been offered from either side to try and reach an agreement but any further offering this week could result in more volatility for the pound. Rates for GBP vs USD are currently sitting below 1.26 for the pair in a vital week in terms of whether Brexit will be delivered by the existing deadline 31st October. Those looking to buy US dollars have been presented with a good opportunity with GBP/USD having reached a 3 ½ month high.
Queens speech today: Government to reveal legislative agenda
A new Queens speech will be held later today where the government will unveil its legislative agenda ahead of the crucial EU summit this Thursday and Friday. The government hopes to secure a deal at this summit and any statements released in the coming days on whether a deal can be reached is likely to result in considerable volatility for the GBP to USD pair. On Saturday parliament will sit and debate that deal although it remains to be seen whether the Prime Minister can get it over the line. As a minority government and with a number of MP’s who are still pushing for a second referendum the government will need to rely on Labour MP’s to have any chance of getting the numbers across the House of Commons. All these difficulties could send the pound in a tail spin.
News of progress in US China trade talks support the USD
The ongoing US China trade war continue to cause uncertainty for the US dollar as well as global financial markets. There appears to be progress in talks at present and the US has just agreed to suspend its next hike in tariffs on Chinese imports after two days of trade talks. President Donald Trump has referred to the negotiations reaching a “phase one deal” which could prove beneficial for the US dollar going forward.
Those with pending requirements looking to buy or sell dollars would be wise to plan around these important developments with just 17 days to go now until Brexit. The pound continues to pivot on the prospect of either a deal or no deal Brexit and any clarification could see the pound jump in either direction.