The pairing stabilised following an announcement that UK car production has been slashed by nearly half, leaving many Sterling traders feeling jittery. According to the Society of Motor Manufacturers and Traders (SMMT) March has been “an extraordinary month”. Mike Hawkes, the SMMT Chief Executive said: “[These] figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers.” The US dollar, meanwhile, has been plagued by ongoing trade tensions between the US and China, as China accuses the US of “naked economic terrorism”, causing greenback investors to become ever more cautious as the two superpowers collide.
Chinese Vice Foreign Minister Zhang Hanhui firmly stated: “We oppose a trade war but are not afraid of a trade war. This kind of deliberately provoking trade disputes is … economic chauvinism, economic bullying.”
US dollar traders are awaiting today’s publication of the flash GDP figures for the first quarter, which are expected to ease.
These will be followed by US continuing jobless claims figures for May, and with any sign of improvement this could see the US dollar rise against the pound.
Today’s speech by the Bank of England’s Deputy Governor Dave Ramsden was generally dovish, clipping gains for Sterling.
Mr Ramsden said: “Relative to the best collective judgement expressed in the [Monetary Policy Committee’s] central forecast I am … a little more pessimistic on GDP growth.”
In Brexit news, the Labour Leader Jeremy Corbyn has done a U-turn on the second referendum, saying that it is now the “only way out” of the political deadlock.
Mr Corbyn said: “Faced with the threat of no deal and a Prime Minister with no mandate, the only way out of the Brexit crisis ripping our country apart is now to go back to the people.”
The pound US dollar exchange rate will remain directed by political developments today, and with the Conservative leadership remaining uncertain and no clear direction for Brexit, this is likely to continue to drag on Sterling.