The pairing fell this morning despite the US Federal Reserve delivering a dovish rate decision yesterday. Joe Manimbo, a Senior Market Analyst at Western Union Business Solutions, said: “The Fed did a big about-face on policy. The fact that the Fed threw in the towel on a 2019 rate hike was particularly dovish.” The Federal Reserve also cut US growth forecasts.
However, while the US dollar fell against a number of its peers following the FOMC policy meeting, the pound US dollar exchange rate failed to benefit with all eyes on Brexit.
Sterling was left broadly struggling last night following Prime Minister Theresa May’s televised address in which she warned MPs to get behind her deal and implied that she might step down as PM if a longer delay is pushed for.
Mrs May is determined that any Brexit delay will only be until 30 June, concluding that it is “now time for MP’s to decide”.
The President of the European Council, Donald Tusk, has also warned that an extension to Article 50 would be conditional on MPs backing Mrs May’s withdrawal agreement in a parliamentary vote next week.
This is leaving many pound traders feeling jittery on fears of a no-deal.
Mr Tusk said: “A question remains open as to the duration of such an extension. Prime Minister May’s proposal of the 30 June, which has its merits, creates a series of questions of a legal and political nature. Leaders will discuss this [today].”
Meanwhile, the Bank of England (BoE) will announce its interest rate decision today.
No rate change is likely, but the central bank may prove optimistic on the UK’s economic outlook.
However, ongoing Brexit developments are likely to overshadow any comments from the BoE.
Today also saw the publication of the UK retail sales figures for February which came in at a better-than-expected 0.4 per cent on the month.
The year-on-year retail sales figures for February also beat forecasts.
The pound US dollar exchange rate will be dictated by Brexit news today, with further volatility likely on any major developments.