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GBP/USD Exchange Rate Suffers on Brexit and Risk Aversion

Last week’s high: $1.2767

Last week’s low:  $1.2482

GBP/USD Hit by Brexit Turmoil as Theresa May Dodges No-Confidence Bullet

After a mid-week recovery attempt, the Pound Sterling to US Dollar exchange rate ended last week lower. The US Dollar benefitted from weakness in rivals and its status as a safe haven currency, allowing it to capitalise on the Pound’s ongoing Brexit-related weakness.

For Sterling, the week was dominated by news relating to UK Prime Minister Theresa May, who kicked off the session by postponing a parliamentary vote on her Brexit agreement, causing the Pound to sink against the Dollar.

By Wednesday she was facing a vote of no-confidence from Tory rebels – a vote she survived intact, causing the Pound to rally across the board.

The Pound rally was short-lived, however, and it was back to regular programing by Friday as May failed to secure any concessions from EU leaders over her Brexit agreement, leading the Pound to Slump against the Dollar.

USD Outlook: Fed Rate Decision in the Spotlight

At the end of last week some better-than-expected US retail sales figures added a bit of glitter to the US Dollar, potentially increasing the odds of the Fed raising interest rates when it meets on Wednesday – odds which were already high.

The Fed won’t be the only bit of central bank action this week, with the Bank of England’s (BoE) upcoming policy meeting on Thursday likely to divert focus away from Brexit, albeit temporarily. Although no change in interest rates is expected, the BoE’s forward guidance note is likely to be analysed in detail for any clues as to the expected path of interest rates going into 2019.

UK retail sales will also be coming out on Thursday with focus likely to be on whether any signs of resilience are present. A day before that, though, we’ll get the latest UK inflation figures which will provide traders with an idea of how price pressures are shaping up at the end of Q4.

Friday will see Q3 GDP figures from both the UK and the US, with either result liable to be influential to the GBP/USD exchange rate pairing.


Key Events

17th December

11:00 UK CBI Industrial Orders (Dec)

18th December

13:30 US Housing Starts (Nov)

19th December

09:30 UK Inflation Rate (Nov)

11:00 UK CBI Distributive Trades (Dec)

19:00 US FOMC Economic Projections Report

19:00 US Fed Interest Rate Decision

20th December

09:30 UK Retail Sales (Nov)

12:00 UK BoE Rate Decision

13:30 US Initial Jobless Claims (Dec)

13:30 US Philadelphia Fed Manu Survey (Dec)

21st December

00:01 UK Gfk Consumer Confidence (Dec)

09:30 UK GDP (Q3)

09:30 UK Public Sector Borrowing (Nov)

13:30 US GDP (Q3)

13:30 US Core Personal Consumption (Q3)

13:30 US Durable Goods Orders (Nov)


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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

Arron Morris

Currency Trader

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