The Pound to US Dollar (GBP/USD) exchange rate hit a 17-month low in Tuesday’s trading as Brexit dominated headlines during a volatile session. The vote on Theresa May’s Brexit deal may not be until next week, but the British Prime Minister lost three votes yesterday in the House of Commons. Theresa May is now forced to hand out the legal advice pertaining to her Brexit deal after it was deemed the government was in contempt of Parliament.
Brexit Debates Create Pound Exchange Rate Volatility
May was handed another blow when Conservative Dominic Grieve proposed a motion which could impact the Brexit settlement. Grieve said: ‘No longer must the will of Parliament – reflecting the will of the people – be diminished. Parliament must now take back control and then give the final decision back to the public because, in the end, only the people can sort this out.’
Meanwhile, economic data has shown UK car sales dropped by -3.0% last month as Brexit hindered purchases.
SMMT Chief Executive Mike Hawes commented:
‘Model and regulatory changes combined with falling consumer confidence conspired to affect supply and demand in November. The good news is that, as supply constraints ease, and new exciting models come on sale in the months ahead, buyers can look forward to a wide choice of cutting-edge petrol, diesel and electrified cars. It’s now critical that a Brexit deal is secured to boost consumer confidence and provide a stimulus to the new car market as we enter the New Year.’
Questions Raised Over US/China Truce Causing Dollar Exchange Rate Losses
US Markets are closed today in national mourning for former President George Herbert Walker Bush. Economic data releases will be postponed for the day as Wall Street closes, but recent tweets from President Donald Trump and a silence on the trade truce from China have caused concerns about the weekend’s progress, causing the US Dollar to retreat. Additionally, trade war threats could hinder not just US economic growth, but also global expansion. J.P Morgan’s Tai Hui commented:
‘Economic growth momentum is taking over as the primary concern for investors, even as the latest ISM manufacturing data is holding up well. This is consistent with our view that the market volatility is likely to rise as we get deeper into the late cycle, with investors questioning growth dynamics and increasing their sensitivity towards downside risks to growth.’
The Pound to US Dollar (GBP/USD) exchange rate is trending in the interbank region of 1.2741.