Pound US dollar exchange rate steady as Boris given just days to revise Brexit proposal

Sterling failed to gain on the US dollar as markets identified the increased risk of a breakdown in UK-EU negotiations, with the EU unyielding against the British premier’s insistence that his proposal is a ‘final’ do-or-die offer. A spokesman at the Élysée Palace commented: “The [French] president told him that the negotiations should continue swiftly with Michel Barnier’s team in coming days, in order to evaluate at the end of the week whether a deal is possible that respects European Union principles.” A Scottish court today rejected an order that would force Boris Johnson to seek an extension if MPs fail to back his new Brexit deal in a parliamentary vote. As a result, the pound remained subdued as fears for a no-deal outcome on October 31 returned. 

Meanwhile, the US dollar held steady as US-China trade uncertainties weighed on market confidence ahead of the week’s round 13 trade negotiations in Washington.

With Beijing increasingly reluctant to compromise on a deal, hopes for a softening of relations between the two superpowers are beginning to slide. 

Peter Bookcvar, the Chief Investment Officer at Bleakely Advisory Group, was downbeat: “We have now tariffed our way into a manufacturing recession in the US and globally … using tariffs as the tool to push back against China was a really dumb idea and history will not look kindly upon the strategy.”

Looking ahead, tomorrow’s US producer price index for September will edge into the spotlight, with forecasts for the figures to ease slightly from 0.3 to 0.2 percent. 

Brexit developments will remain in the driving seat of GBP/USD exchange rates this week, with any sign of a compromise between the UK and the EU likely to prove pound-positive.