Published On: Fri, Jun 14th, 2019

Pound US dollar exchange rate: GBP flat as UK in ‘good shape’ for no-deal Brexit | City & Business | Finance

Sterling was hit this week by investor fears that the possibility of a no-deal Brexit was becoming more likely. Yesterday, Boris Johnson topped the first ballot in the Conservative leadership contest while three contenders were knocked out. Mr Johnson received 114 votes, significantly ahead of his closest rival Jeremy Hunt, who received 43 votes, with currency markets seemingly welcoming the news as Sterling ticked higher when the results were announced. Nevertheless, Mr Johnson’s success is seen to have increased the likelihood of a no-deal Brexit, despite his claims that he was “not aiming for a no-deal outcome”.

Cabinet Secretary Sir Mark Sedwill said that there had been “a lot of preparation” and the government was in “pretty good shape” to cope with a no-deal Brexit.

This gave Sterling some much-needed support, although the British currency was left adrift by Friday morning. 

Meanwhile, Washington has blamed Iran for attacks in the Gulf of Oman on Thursday which caused the oil price to jump over 3 per cent and saw investors rush to the US dollar for safety. 

Speaking to reporters, US Secretary of State, Mike Pompeo was quick to pin the blame on Iran for the attacks.

He said: “It is the assessment of the United States Government that the Islamic Republic of Iran is responsible for the attacks that occurred in the Gulf of Oman today.”

However, Tehran denied the allegations, with Foreign Minister Javad Zarif stating that they were “without a shred of factual or circumstantial evidence” and were merely an attempt to “sabotage diplomacy”.

Despite this, the safe-haven US dollar remains under pressure as markets expect the Federal Reserve to cut interest rates next month. 

Looking to this afternoon, the US dollar could rise following the release of the latest US retail sales data. 

Retail sales are expected to have shown an expansion in May, which could offer support to the US dollar if true.

Meanwhile, Sterling could slide following a speech from the Bank of England Governor Mark Carney. 

If Mr Carney discusses monetary policy and his tone is overly dovish and focuses on the risk of a no-deal Brexit, the pound could enter the weekend on a low note. 

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