Pound to US Dollar (GBP/USD) Exchange Rate Falls as EU Rejects UK’s Post-Brexit Fishing Deal

GBP/USD Exchange Rate Falls as No-Deal Brexit Odds Rise

The Pound to US Dollar (GBP/USD) exchange rate fell by -0.4% today, with the pairing currently trading around $1.338.

The Pound (GBP) struggled today after the European Union (EU) rejected the UK’s post-Brexit fishing deal, leaving many investors concerned over the rising possibility of a no-deal exit on January 1st.

Ian Wishart, an analyst at Bloomberg, commented:

‘With only nine days left before the U.K. leaves the bloc’s single market and customs union with or without an agreement, there are few signs a deal is within reach.’

As a result, GBP investors are becoming jittery as the outlook for the British economy looks increasingly uncertain as we head towards 2021.

However, today saw the UK GDP revised up to 16% for the third quarter, which indicates a faster rate of growth in Q3 than was first estimated.

Nonetheless, UK government borrowing soared to a 50-year high over the summer months as Downing Street attempted to stem the damage of Covid-19 on the British economy.

Chancellor of the Exchequer, Rishi Sunak, commented:

‘As part of our Plan for Jobs we’ve invested £280bn to protect millions of jobs and businesses across the UK.

‘This is the right thing to do to protect lives and livelihoods during this acute phase of the crisis. When our economy recovers, it’s right that we take the necessary steps to put the public finances on a more sustainable footing so we are able to respond to future crises in the way we have done this year.’

US Dollar (USD) Rises on Safe-Haven Demand Despite US Stimulus Optimism

The US Dollar (USD) has continued to head higher as growing coronavirus concerns have strengthened demand for the safe-haven ‘Greenback’.

However, the USD’s gains have been compromised after the US Senate approved at $900 billion, with investors now becoming more optimistic about the world’s largest economy’s recovery.

Steven Mnuchin, the US Treasury secretary, commented:

‘The good news is this is a very, very fast way of getting money into the economy . . . people are going to see this money at the beginning of next week.’

In US economic news, today will see the release of the annualised Gross Domestic Production (GDP) gauge for the third quarter.

Any signs of a resurgence in the American economy could weaken demand for the ‘Greenback’ and limit the USD/GBP exchange rate.

GBP/USD Forecast: Could Fears of a No-Deal Brexit Drag Sterling Down Further This Week?

US Dollar (USD) investors will be awaiting tomorrow’s release of the Durable Goods Orders for November.

Any signs of an improvement in the US economy could further limit demand for the safe-haven ‘Greenback’.

Tomorrow will also see the release of the Michigan Consumer Sentiment Index for December, which is expected to dip to 81.3.

Meanwhile, Pound (GBP) traders will be monitoring UK-EU Brexit developments for the rest of this week.

If talks between the two sides fail to show any signs of progress towards a post-Brexit trade agreement, then we could see the GBP/USD exchange rate plummet.