Last week’s high: $1.3134
Last week’s low: $1.2836
GBP/USD Benefits from Lack of Fresh US Dollar Demand, Brexit Hopes
Despite some strong US data last week, the US Dollar outlook was ultimately unchanged as the figures continued to indicate what markets already expected.
While US ecostats have shown that the US economy is holding up well, there are still signs of the global economic slowdown’s impact, and US political tensions remain a notable weight on US Dollar demand.
The US Dollar is being impacted by the ongoing US government shutdown, which is increasingly likely to have a negative impact on the US economy, as well as uncertainties about US-China trade tensions.
This made it easier for the Pound to sustain strong gains last week. Rising hopes that MPs would vote in favour of potential amendments or legislation to prevent a no-deal Brexit have bolstered hopes for a delay to the formal leaving date.
While a Friday boost for the Pound was short-lived due to persistent doubts that the government’s Brexit bill can pass, GBP/USD still sustained major gains throughout the week overall.
USD Outlook: Market Anticipates US Job Stats and Major Brexit Developments
Political developments are likely to drive the Pound to US Dollar exchange rate for the first half of next week, amid a lack of major economic stats due for publication. Any news regarding the US government shutdown, US-China trade tensions, and of course the Brexit process, are the biggest potential drivers of GBP/USD movement through Wednesday.
Parliament will hold another debate on the government’s Brexit plans on Tuesday. During the debate, MPs may vote on legislation that could influence the direction the process takes, or even delay the process altogether. If the chances of a no-deal Brexit lessen, the Pound will almost certainly strengthen.
Brexit news could influence GBP/USD throughout the week, but the US Dollar could take priority from Wednesday onwards.
The Federal Reserve will hold its January policy decision on Wednesday evening and investors are anxious to see if the bank’s tone on 2019 monetary policy has changed. US-China trade talks are also set to resume on Wednesday.
Of course, influential US Non-Farm Payroll and ISM manufacturing stats due on Friday could also influence the US Dollar.
13:30 US Chicago Fed National Activity Index
15:30 US Dallas Fed Manufacturing Index
15:00 US CB Consumer Confidence
19:00 UK Parliament Vote on Brexit Deal
US-China Trade Talks
09:30 UK Mortgage Lending and Approvals
13:15 US ADP Employment Change
15:00 US Pending Home Sales
19:00 US Federal Reserve Police Decision
00:01 UK GfK Consumer Confidence
14:45 US Chicago PMI
09:30 UK Manufacturing PMI
13:30 US Non-Farm Payroll Report
15:00 US Manufacturing PMI
15:00 US Michigan Consumer Sentiment
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Foreign Exchange Manager