{"id":5679,"date":"2019-08-12T04:39:44","date_gmt":"2019-08-12T08:39:44","guid":{"rendered":"https:\/\/currencylive.com\/?p=5679"},"modified":"2019-08-12T11:05:31","modified_gmt":"2019-08-12T15:05:31","slug":"101081-pound-holds-above-as-investors-await-brexit-developments","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/101081-pound-holds-above-as-investors-await-brexit-developments\/","title":{"rendered":"GBP\/USD: Pound Holds Above $1.20 As Investors Await Brexit Developments"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The pound had another dismal week versus the US dollar. The pound US dollar exchange rate plummeted a further 1% to close at US$1.2037; the fourth straight week that the pound has experienced a weekly loss versus the greenback. The pair was holding steady in early trade on Monday.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>What do these figures mean?<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">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.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, it could be written:<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">1 GBP = 1.28934 USD<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">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.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Or, if you were looking at it the other way around:<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">1 USD = 0.77786 GBP<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">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.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Last week the pound plummeted to its lowest level versus the dollar in over 2 years amid increased fears over the health of the UK economy and lingering Brexit uncertainty. On Friday, the pound tanked after GDP data showed that the UK economy unexpectedly contracted in the second quarter by -0.2%. This was the first contraction since 2012. Whilst stockpiling for Brexit supported the economy in the first quarter, this was an unsustainable form of growth which faltered in the second quarter<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With Brexit still some months off, fears are growing that the UK economy could contract again in the third quarter tipping the UK into a technical recession. The Bank of England could be forced to cut interest rates in order to support a contracting economy. The prospect of a rate cut sooner rather than later sent the pound lower.<\/span><\/p>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Why do interest rate cuts drag on a currency\u2019s value?<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">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. Lower interest rate environments tend to offer lower yields. So, if the interest rate or at least the interest rate expectation of a country is relatively lower compared to another, then foreign investors look to pull their capital out and invest elsewhere. Large corporations and investors sell out of local currency to invest elsewhere. More local currency is available\u00a0 as the demand of that currency declines, dragging the value lower.\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">This week UK labour report is due on Tuesday and inflation report is due on Wednesday. These releases are important. However, the focus remains on Brexit and how it will develop when MP\u2019s return from the summer recess. Discussions are currently revolving around Parliament\u2019s ability to block a no deal Brexit.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">US Recession Fears Hit Dollar Demand<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The dollar gained ground versus the pound across the previous week despite rising speculation that the Federal Reserve could adopt a more dovish stance in the coming months. However, the dollar was broadly lower versus its other peers. The dollar is a safe haven currency, which means in time of geopolitical tensions it tends to fare well. However, the dollar has not seen large safe haven inflows as the US -Sino trade war escalates. This is because investors fear that the US economy could be negatively impacted by the ongoing trade dispute.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With uncertainties of the outlook of the US economy persisting if upcoming data falls short of analyst expectations, speculation of a US recession and a Fed rate cut will increase, dragging the dollar lower.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<hr \/>\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>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 had another dismal week versus the US dollar. The pound US dollar exchange rate plummeted a further 1% to close at US$1.2037; the fourth straight week that the pound has experienced a weekly loss versus the greenback. The pair was holding steady in early trade on Monday. What do these figures mean? When [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":5495,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1386,1394,1409,1391,1414,1392,1415,1397,1398],"class_list":{"0":"post-5679","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-gdp","12":"tag-pound","13":"tag-recession","14":"tag-sterling","15":"tag-trade-dispute","16":"tag-us-dollar","17":"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 Holds Above $1.20 As Investors Await Brexit Developments - 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\/101081-pound-holds-above-as-investors-await-brexit-developments\/\" \/>\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\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Pound Holds Above $1.20 As Investors Await Brexit Developments\",\"datePublished\":\"2019-08-12T08:39:44+00:00\",\"dateModified\":\"2019-08-12T15:05:31+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/\"},\"wordCount\":754,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100587-gbp-usd-brexit-uncertainty-persists.jpg\",\"keywords\":[\"Brexit\",\"gbp\",\"gdp\",\"pound\",\"recession\",\"sterling\",\"trade dispute\",\"us dollar\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2019\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101081-pound-holds-above-as-investors-await-brexit-developments\\\/\",\"name\":\"GBP\\\/USD: Pound Holds Above $1.20 As Investors Await Brexit Developments - 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