The Pound to US Dollar (GBP/USD) exchange rate hit a seven-month low on Tuesday as US/China trade war fears and Brexit uncertainty spooked markets. The GBP/USD exchange rate hit lows of 1.3158 – the weakest level seen since November 2017. It’s not just the Pound taking a beating, other major currencies have been declining against the Dollar as investors look for safe-haven assets at a time of rising uncertainty.
GBP/USD Sinks as Currencies Fall Vs US Dollar on China Trade War Tensions
Senior Market Analyst at City Index Fiona Cincotta commented:
‘The Dollar was one of the few assets benefitting from the Sino-US tensions and rose against a basket of currencies. The Pound, however, was bogged down by domestic problems and declined below $1.32 for the first time since November. Theresa May continues to struggle to get any Brexit-related decision approved by the Parliament and a vote by the Lords is about to make her life even more difficult because it will require that the Commons approve any Brexit deal reached between the government and Brussels.’
Brexit and UK Politics Damage Pound’s Market Appeal
Theresa May looks as if she could be up against some fresh leadership challenges as well as some stiff negotiations with the EU. Progress has been stagnant since March and the June 28th Brexit summit was ordinarily thought to be a monumental event ahead of the rapidly approaching October deadline. However, it seems now as if the meeting will be a glaring reminder of precisely how little progress has been made and what the two sides need to sort– expect a lot of the key issues to come up again, such as the Irish border.
The EU has had its hands full with a number of other issues, such as instability in Germany caused by the migrant crisis and a new anti-establishment government in Italy, which is taking some focus away from Brexit.
As progress in the UK continues to stumble along, there’s even more urgency that decisions need to be made if Britain’s going to leave with some semblance of a deal.
In terms of US data, Tuesday will see the release of US Housing Starts and Building Permits stats.
The Pound to US Dollar (GBP/USD) exchange rate is trading at 1.3163
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