Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, was more cautious in his analysis, commenting: “Other clouds of uncertainty must also include the potential for further political instability as negotiators and policymakers take the next steps. “But with the fastest level of job creation since the summer and a bounce in business optimism not seen since September 2018, commentators could be forgiven for believing there could potentially be a turning point on the horizon if the UK plays its cards right.” Today also saw the announcement that Prime Minister Boris Johnson would open trade talks with the European Commission’s President, Ursula von der Leyen, at Downing Street this week in an attempt to secure a free trade deal with the EU before the January 31 UK leaving date.
This has provided some uplift for the pound to US Dollar exchange rate, with further clarity over Brexit offering British markets a reason for optimism, with Mr Johnson’s revamped Brexit bill expected to pass through the House of Commons due to the Tory’s comfortable majority.
Meanwhile, the US dollar is fluctuating as markets assess the situation in the Middle East after the US airstrike in Iraq killed the Iranian General Qassem Suleimani.
US dollar investors remain cautious as Washington-Tehran relations continue to crumble, leaving American markets weary over possible knock-on effects that could compromise the US-China trade deal which is due to be signed off on January 15.
In US economic news, today will see the release of the US Markit PMI Composite figure for December, with any signs of improvement providing some uplift for the “greenback”.
Looking ahead, the pound to US dollar exchange rate will continue to be driven by the UK’s Brexit developments this week.
If the withdrawal agreement bill successfully passes through Parliament tomorrow we will see the pound rise as the path is effectively cleared for the UK exiting the EU at the end of this month.