GBP/USD exchange rate slips once again

Sterling has dropped back a little against the dollar over the week, as investors start to become concerned once again that Britain will not manage to come out with a provisional deal with the EU by the end of the Brexit summit this week.

News also hit the wires last night that the emergency Brexit summit which had been pencilled in for November has now been cancelled, this could mean one of two things; either there is a good chance that the final sticking points will be resolved in the very near future and we could have a provisional deal in place which could give sterling a big boost – personally I do not feel this is likely at the moment as both sides seem like they are wide apart but you could not rule it out.

The more likely result to come out from this week may be ‘kicking the football down the road’ and delaying any firm agreement for another period of time, many now believe if a deal will be agreed then we may have to wait until December.

It is understood that first thing this morning Theresa May has admitted she could be willing to extend the transition period once we have left, which could be another act of compromise that may get us closer to the line.

In terms of U.S data it still appears that the Federal Reserve will be looking to raise rates again in December which is likely to strengthen the dollar once again. Interest rates can have a direct impact on the value of a currency and as the Fed raise rates, more and more money comes into the dollar from emerging market currencies or currencies with a slightly lower rate of return.

My opinion is still that Brexit is the main factor impacting sterling rates, so any news from the summit today could lead to a very volatile market.

If you have USD to purchase or sell in the near future and you want to be kept fully up to speed with the latest market movements, contact me directly by filling in the contact form below this post and I will be happy to contact you personally.

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