The pairing stabilised as the US continued to edge closer to striking a trade deal with China, potentially ending a long and protracted dispute between the two superpowers. Meanwhile, Brexit remains in the spotlight for pound traders following last night’s backing of a no-deal bill by just one vote. Vishnu Varathan, the Head of Economics at Mizuho Bank, remained cautious about US-China trade talks. He said: “News that a US-China trade agreement is virtually a done deal has fuelled optimism.
“But markets may be converging too quickly on the ‘done’ before the ‘deal’.”
Yesterday saw the US dollar steady following the release of the US ISM non-manufacturing PMI figures for March, which fell below expectation to 56.1 in a 20-month low.
Anthony Nieves, the Chair of the Institute for Supply and Management, said the figures were nothing to worry about.
He said: “Respondents remain mostly optimistic about overall business conditions and the economy.
“They still have underlying concerns about employment resources and capacity constraints.”
US dollar traders will be awaiting the publication of today’s jobs data, with any signs of improvement in the US continuing jobless claims figures for March likely to see the greenback gain on the pound.
Sterling, meanwhile, has had a return of positive market sentiment as the chances of a no-deal Brexit would seem to have diminished after last night’s vote.
If the House of Lords passes the new bill this could further ease fears that the UK could leave the EU chaotically, although ultimately the UK would need to seek permission for any extension.
In fact, many pound traders are remaining cautious as Jean-Claude Juncker, the President of the European Commission, warned the UK that there would be no more delays to Brexit unless a deal is approved by Parliament before 12 April.
Mr Juncker said: “A ‘no-deal’ at midnight on the 12th of April is now a very likely scenario.
“It is not the outcome I want. But it is an outcome for which I have made sure the EU is ready.”
With these sentiments making Sterling traders anxious, it now rests upon Mrs May’s ability to gain a majority in favour of her withdrawal agreement by next week.
The pound US dollar exchange rate will remain dictated by Brexit developments into next week, and any indications that the Prime Minister could gain the necessary cross-party support with the help of Labour leader Jeremy Corbyn could see Sterling soar.