{"id":4575,"date":"2018-05-18T00:00:00","date_gmt":"2018-05-18T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100480-gbp-usd-soft-brexit-prospects\/"},"modified":"2018-05-18T00:00:00","modified_gmt":"2018-05-18T04:00:00","slug":"100480-gbp-usd-soft-brexit-prospects","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100480-gbp-usd-soft-brexit-prospects\/","title":{"rendered":"GBP\/USD: Pound Lifted vs. Dollar on Potential Soft Brexit Backstop"},"content":{"rendered":"<p>The pound is finally made some headway against the dollar, trading higher for the first session in 3. Despite weak UK data and a cautious Bank of England (BoE), the pound moved 0.2% higher versus the buck, hitting a high of US$1.3566 before selling into the close.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> 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<p> For example, it could be written: <em>1 GBP = 1.28934 USD<\/em> <\/p>\n<p> <em>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<p> Or, if you were looking at it the other way around: <em>1 USD = 0.77786 GBP<\/em> <\/p>\n<p> <em>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<p>A UK newspaper reported earlier in the week that he UK Government was to tell Brussels that they will stay in the customs union after Brexit in 2021. This report was not entirely correct. The government announced that the UK will ask the UK to remain in the customs union should they not be able to find a satisfactory solution to the Irish border issue. In other words, if there is no other solution to prevent a hard board in Ireland, the UK will remain part of the EU. This has been agreed by all of the Brexit cabinet and now awaits agreement from Brussels. This means that there is a higher probability of a soft Brexit, which is less disruptive for UK businesses and therefore more beneficial for the UK economy and the pound.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>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<p>There is no high impact UK data due for release today. Investors will look ahead to inflation figures which are due for release next Wednesday. Some analysts are predicting that inflation will have moved higher in April. Should this be the case, the pound lift higher as higher inflation boosts the chances of the central bank hiking interest rates.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<h2><a href=\"#china-trade-talks-in-focus\" name=\"china-trade-talks-in-focus\"><\/a>China Trade Talks in Focus<\/h2>\n<p>Data this week has generally been supportive of the US dollar. Industrial production came in higher than what analysts had been anticipating and US retail sales prior to that were also stronger than forecasts. As a result, general optimism towards the US economy has been strong, which has helped keep the dollar up at 5-month highs.<\/p>\n<p>The US economic calendar is quiet today and remains quiet until the middle of next week. In the meantime, investors will be keep an eye out for any news on the US China trade talks which are underway at the moment.<\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\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 <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>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":"<p>The pound is finally made some headway against the dollar, trading higher for the first session in 3. Despite weak UK data and a cautious Bank of England (BoE), the pound moved 0.2% higher versus the buck, hitting a high of US$1.3566 before selling into the close. What do these figures mean? When measuring the [&hellip;]<\/p>\n","protected":false},"author":163946601,"featured_media":4576,"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":{"0":"post-4575","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gbp","8":"category-usd","9":"tag-brexit","10":"tag-gbp","11":"tag-usd"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/USD: Pound Lifted vs. Dollar on Potential Soft Brexit Backstop - 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\/100480-gbp-usd-soft-brexit-prospects\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tarun Gidwani\" \/>\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\\\/100480-gbp-usd-soft-brexit-prospects\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100480-gbp-usd-soft-brexit-prospects\\\/\"},\"author\":{\"name\":\"Tarun Gidwani\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/cb9d08b81054b1281b909957fd8222cb\"},\"headline\":\"GBP\\\/USD: Pound Lifted vs. Dollar on Potential Soft Brexit Backstop\",\"datePublished\":\"2018-05-18T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100480-gbp-usd-soft-brexit-prospects\\\/\"},\"wordCount\":842,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100480-gbp-usd-soft-brexit-prospects\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100480-gbp-usd-soft-brexit-prospects.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\\\/100480-gbp-usd-soft-brexit-prospects\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100480-gbp-usd-soft-brexit-prospects\\\/\",\"name\":\"GBP\\\/USD: Pound Lifted vs. Dollar on Potential Soft Brexit Backstop - 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