GBP/USD Climbs despite Brexit Jitters amid US Growth Fears

Last week’s high: $1.2703

Last week’s low: $1.2576

Pound to US Dollar Gains Limited by Brexit Uncertainties

Despite a lack of drive in the Pound last week, the British currency was able to sustain some gains against a weakened US Dollar.

In the middle of the week, the Federal Reserve indicated it could ignore warnings about slowing global growth and continue to hike US interest rates gradually in 2019. This briefly caused a US Dollar selloff as investors became anxious about the possibility that US rates may climb too high for the economy to handle.

US Dollar demand remained weak on Friday as US Gross Domestic Product (GDP) data fell short of expectations, in the latest sign that the US economy could be impacted by slowing global growth.

However, uncertainties about how the Brexit process will unfold, as well as comments from Fed officials suggesting that the bank was open to reassessing its monetary policy plans depending on data, prevented the Pound to US Dollar exchange rate from climbing too high.

USD Outlook: US Data to Drive GBP/USD amid Brexit Uncertainties

UK Parliament is on winter recess until the New Year, leaving markets without any significant clarifications on Brexit and leaving the Pound volatile.

Sterling’s movements will remain choppy unless there are surprising developments in UK politics next week, as the week’s only UK dataset is unlikely to be particularly influential.

This means the US Dollar is likely to drive Pound to US Dollar exchange rate movement for the coming week.

The US Dollar will be driven by US data, and could strengthen if the reports comes in strongly enough to make investors more optimistic about the Federal Reserve’s policy outlook.

Key Events

24th December

13:30 US Chicago Fed National Activity Index

26th December

15:00 US Richmond Fed Manufacturing Index

27th December

13:30 US Jobless Claims

15:00 US CB Consumer Confidence

15:00 US New Home Sales

28th December

09:30 UK Finance Mortgage Approvals

13:30 US Wholesale Inventories

14:45 US Chicago PMI

15:00 US Pending Home Sales


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Arron Morris
Senior Currency Broker
T: 01442 892 065