The US dollar has slipped against a handful of currencies today thanks to a dovish Federal Reserve and increased tensions in the Middle East. US President Donald Trump said that he is going to impose hard-hitting sanctions on Iran in response to the shooting down of a US drone and “many other things.” Tensions between the US and Iran have increased but it has been claimed by US Treasury Secretary Steven Mnuchin that this executive order was in the works before Iran shot down a US drone. Meanwhile, on Monday US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin held a phone conversation with Chinese Vice-Premier Liu He.
During this call officials exchanged opinions on trade from the two countries’ heads of state, and there was an agreement to maintain communications.
It was reported by Xinhua News Agency that the call took place at the request of the United States.
Added to this, a senior US official stated that US President Trump views the meeting with Chinese Leader Xi Jinping as a chance to see where China stands.
The official also added that the US is “comfortable with any outcome”.
President Trump and Leader Xi Jinping are expected to meet on the second day of the G20 summit, making it the first face-to-face meeting since trade talks disintegrated in May.
It is likely the “Greenback” will remain under pressure ahead of the Trump-Xi meeting.
Meanwhile, front-runner in the Conservative leadership contest Boris Johnson stated he would need co-operation from the European Union to avoid a hard Irish border or trade tariffs if the UK crashes out of the EU without a deal.
In an interview with the BBC, Mr Johnson said that he did “not believe for a moment” that the UK would leave the EU without a deal, although he insisted he was willing to do so.
However, despite Mr Johnson downplaying the risk of a no-deal outcome demand for the pound remained muted.
Looking ahead to this afternoon the US dollar could rise against the pound following the release of the US Housing Price Index.
If house prices rise by more-than-forecast in April, it could provide an upswing of support for the “Greenback”.
There would then be the potential for the pound to extend losses against the US dollar following the release of the Bank of England’s (BoE) inflation report hearings.
If the report suggests that inflation will soon fall below the bank’s 2 per cent inflation target, it could dampen sentiment in the pound.