Last week’s high: $1.2912
Last week’s low: $1.2767
GBP/USD Fails to Sustain Major Gains Despite UK-EU Deal
Despite Sterling gaining against many other major currencies last week, the Pound to US Dollar exchange rate ultimately closed the week close to its opening levels as the US Dollar remained an appealing buy.
Investors bought the Pound on Thursday as the UK and EU issued a political declaration about their goals for future relations.
However, concerns persisted about the lack of support for Theresa May’s Brexit deal in the UK. Former Brexit Minister Dominic Raab even predicted on Friday that the deal would be blocked by Parliament.
The US Dollar experienced mixed movement throughout the week as investors speculated that the Federal Reserve’s interest rate hike cycle could come to an end over the next year.
Ultimately though, with investors anxious about UK politics and the possibility that global growth will soon begin to slow, safe-haven currencies like the US Dollar remained in demand.
USD Outlook: UK Political Developments and US Data in Focus
Pound investors will be spending the beginning of the week reacting to the outcome of the UK-EU Brexit summit.
With UK Parliament not expected to vote on the Brexit bill until December, markets will instead be watching for any shifts in opinion towards UK Prime Minister Theresa May and her Brexit plan.
If the Brexit plan still appears to be lacking in enough support to pass Parliament, investors are unlikely to have much reason to buy the Pound.
In this scenario, we would expect GBP/USD to weaken. There is plenty of notable US data on the way this week, including US growth rate projections for Q3, wholesale inventories, and the Federal Reserve’s latest meeting minutes.
The Fed meeting minutes could be particularly influential if they indicate that a more cautious or dovish stance will be adopted next year. This would leave the US Dollar weaker.
13:30 US Chicago Fed National Activity Index
15:30 US Dallas Fed Manufacturing Index
18:30 UK BoE Gov Carney Speech
11:00 UK CBI Distributive Trads
15:00 US CB Consumer Confidence
13:30 US Growth Rate
13:30 US Wholesale Inventories
15:00 US New Home Sales
17:00 US Fed Chair Powell Speech
09:30 UK Mortgage Lending and Approvals
13:30 US PCE Price Index
13:30 US Personal Income and Spending
19:00 US Fed Minutes
00:01 UK GfK Consumer Confidence
14:45 US Chicago PMI
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Senior Currency Broker
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