After falling lower than 1.330 on February 27th, the GBP/USD pair saw a surge after an announcement that Brexit could be delayed. Unfortunately, this surge was short-lived and early-day data from New Zealand, Australia, Japan and China weren’t positive. This meant that investors were pushed towards USD.
It is estimated that the delaying of Article 50 could bring some optimised to GBP, but this can depend on what the outcome is on March 12.
France has stated that it will look to block a delay in Brexit proceedings unless there was a viable reason, and that simply postponing the deadline was neither reasonable nor desirable.
German Chancellor Angela Merkel was more supportive of the extensions, although was clear in stating that no extension would be offered if there was no clear objective.
Gross Domestic Product is also an important catalyst to consider. The growth figure for Q3 is likely to drop from 3.4% to 2.3% compared to Q4.
The forecast will remain to be uncertain, as there are several outcomes in relation to Brexit, depending on what happens next.
People Have Little Confidence to Positive Brexit Outcome
It already been shown that many people have lose faith in the British Prime Minister’s plans in relation to Brexit, as several proposals have already been rejected.
As well as three Cabinet ministers threatening to resign should there be a no-deal proposal put forward, there are three junior ministers who voted to remain in the EU that will also reign.
Labour announced it would be in support of a new public vote to ensure that Britain isn’t subjected to the consequence of a no-deal Brexit.
On the other side of the pond, US President Donald Trump announced that were would be another summit, and completion was on the horizon.
The approach taken mu Federal Reserve Chairman Jerome Powell could make all the difference as to whether USD rises or drops. A hawkish approach could be detrimental, whereas a more upbeat approach could mean the Greenback has some buoyancy.
A tweet from Donald Trump also showed that there could be a lessening of tensions between China and the US in relation to trade discussions.
The tweet stated that there would be a delay in implementing tariff increases on Chinese goods after substantial progress had been made.
In the past, the USD had suffered due to the “tit-for-tat” tweets being made at the time which inflamed the situation in relation to tariff charges.