The GBP/USD pairing slowly fell back following news that Democrats and Republicans seemed to have reached an agreement over US border security, narrowly avoiding the threat of yet another government shutdown.
The deal needs to be approved by Congress and signed by President Donald Trump, and although it is unclear whether approval will be given, Mr Trump has stated defiantly: “We’re building the wall anyway.”
Yesterday was a quiet day for US economic data releases, with only a few comments from the Fed to give direction.
Federal Reserve board member Michelle Bowman said she agrees with the recent shift to a patient approach to tightening monetary policy, stating:
“When I look at the jobs numbers and when I look at the inflation numbers, our economy’s in a good place […] I think our policy is in a good place, I’m comfortable with the current stance of our policy.”
Following her remarks, the GBP/USD pairing continued to drift lower, with the slide being greased by the slew of disappointing UK GDP and manufacturing releases from the morning.
Data showed that UK annual growth had hit a six-year low in 2018, as the economy expanded by only 1.4 percent.
The three main sectors of the economy shrank, with the manufacturing sector contracting for a sixth consecutive month, falling into a technical recession and further dampening sentiment in the pound.
Bank of England Governor, Mark Carney is due to give a speech this afternoon, with Sterling likely to fall further if he reverts to a more dovish tone following his upbeat comments last week.
Also scheduled for this evening is a speech from the chairman of the Federal Reserve, Jerome Powell, which could see the US dollar slip if the tone of his speech is muted.