The British pound today declined against the US dollar in the early European session despite the release of November inflation data, which met expectations. The GBP/USD currency pair continues to trade in a tight range for the week against the weak US dollar largely due to the prevailing uncertainty regarding Brexit.
The GBP/USD currency pair today dropped from a high of 1.2680 to hit a low of 1.2642 and was within this range at the time of writing.
The currency pair’s rally this week has been significantly hampered by the prevalent uncertainty surrounding Brexit even as the UK government prepares for a no-deal Brexit. Theresa May’s government through the home secretary Sajid Javid recently published a new immigration white paper denying low-skilled EU immigrants automatic rights to work in the UK. These issues overshadowed the release of the November consume price index data by the UK’s Office for National Statistics. The headline CPI print came in at a monthly 0.2% translating into an annualized 2.3%, while the core CPI print was recorded at 1.8%; all three prints met expectations.
The Brexit headwind prevented the Sterling pound from rallying higher against the much weaker US dollar as tracked by the US Dollar Index. It is unclear whether the pair will rally if the greenback falls further following the Fed monetary policy announcement.
The currency pair’s future performance is likely to be affected by the FOMC‘s interest rate decision and monetary policy outlook.
The GBP/USD currency pair was trading at 1.2648 as at 11:00 GMT having dropped from a high of 1.2680. The GBP/JPY currency pair was trading at 142.13 having fallen from a high of 142.53.
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