{"id":4260,"date":"2018-01-22T00:00:00","date_gmt":"2018-01-22T05:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100318-gbp-usd-brexit-us-gov-shutdown\/"},"modified":"2018-01-22T00:00:00","modified_gmt":"2018-01-22T05:00:00","slug":"100318-gbp-usd-brexit-us-gov-shutdown","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100318-gbp-usd-brexit-us-gov-shutdown\/","title":{"rendered":"GBP\/USD: Brexit & US Government Shut Down To Drive Pound vs. Dollar Tr"},"content":{"rendered":"

The pound once again moved higher versus the dollar last week, gaining 0.9%. This was the 5th straight week that the pound gained versus the dollar, rallying almost 4% since week beginning 17th December. The pound hit a high of US$1.3940 last week, its highest level since the Brexit referendum, before easing back towards the close on Friday.<\/p>\n\n\n\n\n\n
What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n
\n

When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute. <\/p>\n

For example, it could be written: 1 GBP = 1.28934 USD<\/em> <\/p>\n

Here, \u00a31 is equivalent to approximately $1.29. This specifically measures the pound\u2019s worth against the dollar. If the US dollar amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n

Or, if you were looking at it the other way around: 1 USD = 0.77786 GBP<\/em> <\/p>\n

In this example, $1 is equivalent to approximately \u00a30.78. This measures the US dollar\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the dollar.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

Weaker than forecast UK retail sales data on Friday dampened sentiment towards sterling. Data showed that retail sales increased just 1.3% year on year in December, considerably short of the 2.6% that analysts were expecting. Furthermore, the figure confirmed a decline from retail sales growth of 1.5% in November. On a monthly basis, retail sales dropped -1.6%, lower than the 1% decline forecast by analysts.<\/p>\n

These figures confirm that retail sales experienced the biggest fall since the Brexit referendum in June 2016, as high inflation and falling wages in real terms meant consumers reined in their spending as the pressure on their pay cheque increased.<\/p>\n

This paints concerning picture for the UK economy, which is so dependent on the UK consumer. As a result, the pound fell.<\/p>\n

.<\/p>\n

Moving in to the new week, the pound could find itself supported by Brexit headlines. Britain\u2019s hopes of receiving a bespoke Brexit deal were boosted after French President Macron said that the UK might get a special deal. Britain is unable to have full access to the single market, unless it adheres to all the EU rules. However, Macron said he envisaged a half-way house, something which had previously been ruled out by EU chief negotiator Michel Barnier. This would mean of softer Brexit, which is more beneficial for the pound.<\/p>\n\n\n\n\n\n
Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit? <\/th>\n<\/tr>\n<\/thead>\n
A soft Brexit implies anything less than UK\u2019s complete withdrawal from the EU. For example, it could mean the UK retains some form of membership to the European Union single market in exchange for some free movement of people, i.e. immigration. This is considered more positive than a \u201chard\u201d Brexit, which is a full severance from the EU. The reason \u201csoft\u201d is considered more pound-friendly is because the economic impact would be lower. If there is less negative impact on the economy, foreign investors will continue to invest in the UK. As investment requires local currency, this increased demand for the pound then boosts its value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

<\/a>Will US Government Shut Down Keep The Dollar Fragile<\/h2>\n

The US government officially shutdown on Friday at midnight, after the US senate failed to pass a spending bill approved earlier by the House. This means that US government activities will come to a halt, until the funding is approved. Late Sunday there was still no sign of either the Democrats or the Republicans giving in, amid disagreements over Trump\u2019s policy on migration. The fact that Republicans hold the majority in both houses, indicate how fragile President Trump\u2019s authority is, even in his own party. The political instability is likely to weigh on the US dollar until there is a solution in sight.<\/p>\n\n\n\n\n\n
How does political stability boost a currency? <\/th>\n<\/tr>\n<\/thead>\n
Political stability boosts both consumer and business confidence, which means corporations and regular households alike are more likely to spend money. The increased spending, in turn, then boosts the economy. Foreign investors prefer to invest their money in politically stable countries as well as those with strong economies. For foreign investors to put their money into an economy, they need local currency. As they acquire the money needed, the demand for that particular currency increases, which then boosts its value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n\n\n\n
\n


\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our risk warning<\/a> page for more details.<\/em><\/small><\/p>\n

This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

The pound once again moved higher versus the dollar last week, gaining 0.9%. This was the 5th straight week that the pound gained versus the dollar, rallying almost 4% since week beginning 17th December. The pound hit a high of US$1.3940 last week, its highest level since the Brexit referendum, before easing back towards the […]<\/p>\n","protected":false},"author":163946597,"featured_media":4261,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1386,1394,1398],"class_list":["post-4260","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-brexit","tag-gbp","tag-usd"],"acf":[],"yoast_head":"\nGBP\/USD: Brexit & US Government Shut Down To Drive Pound vs. Dollar Tr - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100318-gbp-usd-brexit-us-gov-shutdown\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Brexit & US Government Shut Down To Drive Pound vs. Dollar Tr\",\"datePublished\":\"2018-01-22T05:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/\"},\"wordCount\":879,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100318-gbp-usd-brexit-us-gov-shutdown.jpg\",\"keywords\":[\"Brexit\",\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100318-gbp-usd-brexit-us-gov-shutdown\\\/\",\"name\":\"GBP\\\/USD: Brexit & US Government Shut Down To Drive Pound vs. Dollar Tr - 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