GBP/USD correction continues
The Pound continues its struggle against the US Dollar initially breaking the 1.24 marker in the early hours of today’s trading session, despite the FED’s decision to raise benchmark interest rates to 1% last Wednesday.
The correct comes amid hopes for an interest rate hike from the Bank of England, when FOMC member Kristin Forbes voted in favour of a hike as inflation continues to rise above the BoE’s target of 2%.
Trump hurting US Dollar sentiment
A number of key political issues will be playing on investor’s minds this week. President Trump must answer some important questions surrounding his allegations of wiretapping, Russia’s potential involvement in the 2016 Presidential race, as well as Thursday’s vote on the repealing of Obamacare.
Furthermore, a recent poll by Gallup shows that Donald Trump has one of the worst approval ratings since history begun at 37%. To put this into perspective, George Bush held an approval rating of 58% just two months into office.
If Trump is shown to have ties with the Russian’s, either before or during the Presidential campaign, his role as President could be severely compromised leading to weakness on the US Dollar.
Article 50 deadline set for 29th March
Theresa May has confirmed the UK will begin the process of an EU-exit next Wednesday, as such GBP/USD trended lower at lunchtime today.
The anticipated invocation of Article 50 has been playing on investor’s minds since last June, and will pave the way for negotiations between the UK and remaining EU member states.
GBP/USD may retract from its weekly highs as a result of the announcement, as the level of uncertainty is set to intensify ahead of the negotiations due thereafter.
Markets will be interested in how these negotiations take form, and will look for signs that a constructive agreement can be found that benefits both the UK and remaining EU members.