GBP/USD Recovers on Brexit Hopes and Supportive Data

Last week’s high: $1.2165

Last week’s low: $1.2018

Pound Stages Solid Recovery Vs. USD

After rebounding from its worst levels last week, the appeal of Sterling improved with stronger-than-expected UK data and a show of solidarity by Britain’s opposition parties in their desire to block a no-deal Brexit.

This paved the way for sustained GBP/USD gains throughout the week.

The appeal of the US Dollar was limited by rising US-China trade war fears and speculation that the country is heading for recession.

US recession fears intensified when the US yield curve inverted for the first time since 2007. This has typically been seen as the harbinger of recession in the past.

USD Outlook: Brexit and Federal Reserve News in Focus

Although the Pound gained on the promise of UK political solidarity against a no-deal Brexit, the currency could still backslide if efforts to block a disorderly exit from the EU prove abortive.

US news is likely to influence GBP/USD next week, with US home sales and PMI stats due for publication on Wednesday and Thursday respectively.

The US outlook could also be heavily influenced by Wednesday’s Federal Reserve meeting minutes. If the bank presents a dovish tone the Pound to US Dollar exchange rate could rise on heightened Fed interest rate cut bets.

Key Events

20th August

11:00 UK CBI Industrial Trends Orders

21st August

15:00 US Existing Home Sales

19:00 US FOMC Meeting Minutes

22nd August

11:00 UK CBI Distributive Trades

14:45 US Markit PMI Projections

23rd August

15:00 US New Home Sales


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Alastair Archbold
Currency Trader
T: 01442 892 062