{"id":4981,"date":"2018-10-24T00:00:00","date_gmt":"2018-10-24T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100700-gbp-usd-irish-backstop-brexit\/"},"modified":"2018-10-24T00:00:00","modified_gmt":"2018-10-24T04:00:00","slug":"100700-gbp-usd-irish-backstop-brexit","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100700-gbp-usd-irish-backstop-brexit\/","title":{"rendered":"GBP\/USD: Promising News On Irish Backstop Lifts Pound vs. Dollar"},"content":{"rendered":"<p>Brexit optimism overshadowed disappointing UK economic data lifting the pound versus the US dollar. The pound US dollar exchange rate pushed northwards regaining some of Monday\u2019s heavy losses. The pound closed Tuesday\u2019s session 0.1% higher at US$1.2986.<\/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>\n<p>Data from the Confederation of British Industry (CBI) dampened demand for the pound in early trading on Tuesday. The CBI reported that British factory orders fell the fastest in three years. The high levels of uncertainty that still persist even though there are just 5 months to go until Brexit means manufacturers are the least optimistic since the Brexit referendum back in June 2016.<\/p>\n<p>Businesses still don\u2019t know whether an orderly or disorderly Brexit is on the cards. Investment. Given the complete lack of clarity, factories have scaled back on investments and analysts expect investment to hit a standstill over the coming three months. The disappointing report hit demand.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does poor economic data drag on a country\u2019s currency?<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Slowing economic indicators point to a slowing economy. Weak economies have weaker currencies because institutions look to reduce investments in countries where growth prospects are low and then transfer money to countries with higher growth prospects. These institutions sell out of their investment and the local currency, thus increasing supply of the currency and pushing down the money\u2019s worth. So, when a country or region has poor economic news, the value of the currency tends to fall.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Brexit developments were on hand to boost the pound in the afternoon session on Tuesday. Reports surfaced that the EU will give UK Prime Minister a helping hand in her hour of need. The EU will reportedly offer the PM a UK wide customs union as a way of getting around the Irish backstop issue. This would certainly satisfy Theresa May\u2019s demands that Northern Ireland is to receive the same treatment as the rest of the UK. Should this be agreed, a soft Brexit is once again an option on the table.<\/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>\n<p>Today Theresa May is set to face Tory backbenchers in an attempt to win them over. The pound will watch her performance and the rebels\u2019 response closely.<\/p>\n<h2><a href=\"#us-stock-market-sell-off-weighs-on-dollar\" id=\"us-stock-market-sell-off-weighs-on-dollar\"><\/a>US Stock Market Sell Off Weigh\u2019s on Dollar<\/h2>\n<p>The dollar drifted lower in the previous session after rising for two straight sessions versus the pound. Usually geopolitical concerns would normally push investors towards the safe haven dollar. Geopolitical concerns are rife at the moment with fears over Saudi Arabia\u2019s isolation following the death of Jamal Khashoggi, over Brexit and Italy\u2019s growing conflict with the ECB. However, the US stock market suffered an extreme sell off on Tuesday. This put the dollar at a disadvantage versus other safe haven currencies.<\/p>\n<p>Whilst geopolitics will remain a key driver for the dollar, investors will also look towards the US PMI figures for services and manufacturing.<\/p>\n<hr \/>\n<p><small><\/p>\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>Brexit optimism overshadowed disappointing UK economic data lifting the pound versus the US dollar. The pound US dollar exchange rate pushed northwards regaining some of Monday\u2019s heavy losses. The pound closed Tuesday\u2019s session 0.1% higher at US$1.2986. What do these figures mean? When measuring the value of a pair of currencies, one set equals 1 [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4982,"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-4981","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-brexit","tag-gbp","tag-usd"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/USD: Promising News On Irish Backstop Lifts Pound vs. Dollar - 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\/100700-gbp-usd-irish-backstop-brexit\/\" \/>\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\\\/100700-gbp-usd-irish-backstop-brexit\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100700-gbp-usd-irish-backstop-brexit\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Promising News On Irish Backstop Lifts Pound vs. Dollar\",\"datePublished\":\"2018-10-24T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100700-gbp-usd-irish-backstop-brexit\\\/\"},\"wordCount\":876,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100700-gbp-usd-irish-backstop-brexit\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100700-gbp-usd-irish-backstop-brexit.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\\\/100700-gbp-usd-irish-backstop-brexit\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100700-gbp-usd-irish-backstop-brexit\\\/\",\"name\":\"GBP\\\/USD: Promising News On Irish Backstop Lifts Pound vs. Dollar - 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