The pound has dropped sharply against the USD after a number of British ministerial resignations yesterday, including Brexit Secretary Dominic Raab. The pound fell by almost three cents yesterday taking levels back down to 1.2750 for the GBP USD pair and creating a good opportunity for those clients looking to sell dollars. The outlook on Brexit is extremely unclear and a vote of no confidence in the Prime Minister is starting to look more than likely to happen. As the situation develops in these coming weeks the pound to dollar rate of exchange will be impacted further.
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The dollar has received a boost after the US reported strong retail sales numbers yesterday. US retail sales for October arrived at 0.8% which was higher than the 0.5% expected, with a surge in motor vehicle sales and building materials. The outlook is also positive for the next few months with gasoline prices expected to fall.
This should create a mini boost for consumer spending.
The data wasn’t all positive though with a small rise in initial jobless claims which measures first time claims for jobless benefits, whilst continuing jobless claims also picked up.
The US dollar could also come under a new wave of selling pressure as the Russia investigation headed by Robert Mueller continues, which seeks to establish if anyone from Donald Trump’s 2016 election campaign colluded with the Russians. Donald Trump has been on the attack tweeting heavily about this and there is likely to be more from this story.
US industrial production figures for October are released this afternoon. Expectation is for a small drop in the numbers although it is unlikely to change future policy from the The US Federal Reserve (Fed). The Fed is expected to raise interest rates at the next meeting in December which could help support the dollar further.
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