Sterling traders are increasingly jittery as MPs opposed to a no-deal now have only a short time to implement a strategy ahead of the October 31 deadline. The Labour Party’s continuing resistance to a general election prevented the pound from sinking further against the US dollar today with Labour leader Jeremy Corbyn emphasising his party will only vote for an election if the no-deal bill becomes law on Monday.
He added: “Let this bill pass and gain royal assent, and then we will back an election – so we do not crash out of the European Union with a no-deal exit.”
The pound could gain on the US dollar later this afternoon if the House of Lords accept the no-deal Brexit bill as predicted.
In British economic news, today’s Halifax house prices figure for August rose above consensus by 0.3 percent, offering a lifeline to the pound.
Russell Galley, a Director at Halifax, noted: “While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong.”
The US dollar’s rise against the pound can also be attributed to market optimism ahead of an expected 3.1 percent increase in the US earnings figure for August.
Today will also see the publication of August’s US non-farm payrolls which could weigh on the “greenback” if they meet expectations and decrease from 164 thousand to 158 thousand.
US-China trade tensions remain in focus for USD investors as relations between the two superpowers show gradual signs of improvement. Negotiators are planning high level trade talks in October but analysts remain sceptical.
Scott Kennedy of the Center for Strategic and International Studies suggests Beijing is unlikely to make any “monster compromises” in the Washington meeting.
Looking ahead to next week we could see the GBP/USD exchange rate rise on Monday if a majority vote in the House of Commons effectively shelves a no-deal Brexit.