Pound to US Dollar Exchange Rate Outlook Jittery on Brexit and US Election Anticipation

Pound to US Dollar Exchange Rate Climbs despite No-Deal Brexit Fears

Last week saw the British Pound to US Dollar (GBP/USD) exchange rate tumble as investors looked for safe havens. Sterling (GBP) was also hit hard by rising no-deal Brexit fears, but these fears have not been enough to prevent GBP/USD gains today.

After opening last week at the level of 1.3045, GBP/USD spent the week trending with a downside bias. Ultimately, GBP/USD shed over a cent and closed the week around the level of 1.2915.

GBP/USD was able to hold above lows of 1.2871 though, and the pair is rebounding today. At the time of writing on Monday, GBP/USD has clawed back over half a cent and currently trends near the level of 1.3000.

The Pound’s gains today are largely due to rival weakness and anticipation for Brexit talks. The outlook is overall gloomy though, so Sterling could give back gains if Brexit concerns worsen.

Pound (GBP) Exchange Rates Strengthen ahead of More Brexit Negotiations

Last week saw the Pound volatile, as the British currency’s outlook was hit by uncertainty over the direction of the Brexit process.

UK negotiators indicated they would give up on negotiations unless the EU softened its conditions. However, EU officials continue to say that talks are still ongoing despite this.

Sterling is climbing across the board today, despite rising no-deal Brexit fears.

The gains come amid anticipation for more crunch talks expected this week. Negotiators are still expected to talk on the phone despite UK indication that it has dropped talks.

According to Economists at Berenberg:

‘We thus have to watch carefully the risk that neither side blinks and, in the end, the two sides finally part ways without a deal,’

US Dollar (USD) Exchange Rates Tumble as Asian Currencies Gain

The US Dollar (USD) is a safe haven currency. It spent much of last week surging higher on concerns over the global coronavirus pandemic, as well as doubts that US fiscal policy would be passed.

However, the currency is plunging today, shedding much of last week’s gains. This is due to various factors causing a brief surge in risk-sentiment.

Investors are more eager to take risks after it was reported that China’s economy was successfully recovering from the coronavirus pandemic. This left many assets gaining in Asia, and these often gain when markets are more willing to take risks.

Lingering hopes that US Congress could still reach an agreement on fiscal policy in the coming sessions also boosted risk-sentiment.

Pound to US Dollar (GBP/USD) Exchange Rate Awaits Brexit and Fed Developments

GBP/USD movement has the potential to be highly volatile this week, with the fate of the Brexit process in the balance.

UK-EU negotiations are continuing on a limited capacity as UK officials say they have walked away from talks unless the EU softens its positions.

As a result, if a no-deal Brexit becomes seen as a bigger possibility, the Pound could shed much of its recent advance attempts and see even bigger losses.

On the other hand, if some kind of deal is reached after all, the Pound is more likely to sustain gains.

This will be a big focus for GBP/USD throughout the week. As for the US Dollar, movement could be influenced by Federal Reserve comments and US politics in the coming sessions.

Many Fed officials, including Chairman Jerome Powell, will hold speeches in the coming sessions.

If there are no optimistic developments in US fiscal stimulus talks, the US Dollar could advance on safe haven demand.

Politics will likely overshadow data, but Pound to US Dollar (GBP/USD) exchange rate investors will be watching Wednesday’s upcoming UK inflation data as well.