- GBPUSD exchange rates fall a further cent since yesterday’s trading day
- Brexit uncertainty begins to weigh in on Sterling
- Article 50 deadline set for March 2017
- US elections to cause market volatility
- Will the FED hike rates this year?
With the news that Theresa May will trigger Article 50 by March 2017, Sterling has lost momentum pushing GBPUSD exchange rates to their lowest levels since 1985. The UK now has until March 2019 to re-negotiate trade deals with the EU or find itself trading under WTO.
The impact on Sterling has been intensified by the lack of planning from the British Government, with ‘Brexit’ still yet to be defined. It does however, given Theresa May’s request for border controls, imply that the UK could be looking to remove itself from the single market altogether.
US elections to cause a stir
With the US elections in November, current exchange rate levels will likely flip somewhat with the potential for a Trump victory. Donald Trump remains a huge unknown for the US economy with some economics predicting he could damage the economies GDP. Hillary Clinton whilst a safer candidate is marginally ahead of Trump in the polls. As we approach November markets will become increasingly nervous especially if the polls remain neck-on-neck.
The outcome of the US elections could also impact the likelihood of a FED hike this year. Trump’s recent comments about Chairlady Yellen has prompted some to believe she may resign if Trump takes Presidency. With this in mind the FED are unlikely to hike interest rates just days before the elections in November, and could hold off until 2017 to give the markets time to adjust to a Trump presidency.
If Hillary Clinton wins the odds of a hike in December are much more likely in my opinion. In any event, those holding US Dollars to buy Sterling should consider acting well in advance of the elections in November. As we approach the latter part of October the US Dollar will likely weaken.