The pound to US dollar rate was in fine form on Thursday evening and Friday after the Conservative party won a huge election majority, paving the way for the UK’s departure from the EU by 31 January. The pair subsequently raced over the 1.35 level for the first time in 19 months, which represented its biggest rise since 2017.
Where Next for the Pound to US Dollar Exchange Rate?
So, what does the immediate future hold for the pound to US dollar rate, now that the general election is done and dusted? Mr Johnson is well-placed to deliver an orderly exit from the EU in January, after years of political uncertainty. However, that is unlikely to happen until the new year. In the meantime, the pair will be keeping a close eye on Brexit developments. Particularly, around a free trade deal, with Mr Johnson’s parliamentary majority giving him a strong hand for dealing with Eurosceptic hardliners.
Raft of Economic Data Releases Next Week
Brexit isn’t the only thing on the pound’s agenda. The UK’s economic data calendar is jam-packed with top tier releases and announcements next week. The pick of the bunch is Markit Manufacturing PMI for December, the ILO Unemployment Rate and the Consumer Price Index for November. Monetary policy comes into sharp focus on Thursday when the Bank of England makes its latest interest rate announcement, with borrowing costs forecast to remain on hold. This deluge of data will provide an indication of the current health of the UK economy. A raft of negative readings could trip up the pound v US dollar rate, following its election inspired optimism.
The dollar meanwhile will be keeping a close eye on developments in the ongoing US-China trade war, after optimistic tweets from President Trump this week indicated a ‘phase one’ trade deal is imminent. Friday’s GDP figures stand out as the most significant data release from the US next week.
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