Pound US dollar exchange rate: GBP shoots higher despite ‘Pandora’s box’ warning
Pound US dollar exchange rate: GBP is currently trading up 0.7 per cent at a rate of $1.282 (Image: GETTY)
The pound US dollar exchange rate has remained volatile at the start of this week’s session as Theresa May begins her final push to get her EU withdrawal agreement through Parliament. The pound shot higher as European Court of Justice Advocate General Manuel Campos Sánchez-Bordona said it might be possible for the UK to revoke Article 50. This could mean the possibility of abandoning Brexit and staying in the EU. Warning against such a move, however, the Advocate General for Scotland Lord Keen stated the unilateral revocation of Article 50 would provide “political ammunition” to Remainers.
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He added: “In Greek myth, Pandora was given a large box […] which she was told not to open.
“We respectfully plead the court should not open this box.”
November’s UK construction PMI was released this morning, showing a higher-than-expected figure of 53.4, despite a forecast suggesting this figure would drop.
This this is likely to have aided the pound in pushing back against the US dollar.
The signs of cooling US-China tensions, which took place over the course of the weekend, have caused broad dollar weakness as investors abandon safe havens.
President Donald Trump and President Xi Jinping agreed not to increase tariffs for 90 days starting on 1 January, calling a temporary truce.
Despite the fact investors are pulling their funds out of the safe-haven dollar, the pound still managed to sink yesterday morning, only recovering some of its losses this morning.
Some disappointing US data was released yesterday afternoon, although the pound still struggled as Brexit anxieties weighed hard on the currency.
US IMS prices paid for November showed a greater-than-expected fall to 60.7, and the Markit manufacturing PMI for November dropped to 55.3, despite the prediction it would remain more positive.
With the lack of notable UK or US data releases, it seems likely the pairing is going to remain driven by politics this week with Brexit largely being the catalyst for movement within the pound especially.
Danske Bank strategist Morten Helt said: “Until the British Parliament votes on the deal next week we are going to see a steady drum beat of Brexit headlines, which is going to keep the pound weak.”