This comes as analysts suggest a vote of no-confidence in Boris Johnson may not be enough to prevent the UK from leaving the EU without a deal. With the deadline now fewer than 12 weeks away, MPs opposed to a no-deal Brexit are reported to be holding secret talks in order to “rewrite the Commons rulebook”. This could involve MPs pushing through a bill compelling the Prime Minister to seek another extension from the EU if a deal cannot be agreed before the end of October.
At the same time, the US dollar opens this week on the back foot as a result of ongoing US/China tensions.
USD investors are increasingly concerned by the impact the trade dispute may have on the US economy and how it could prompt additional rate cuts from the Federal Reserve.
Tweeting over the weekend, President Donald Trump further inflamed tensions by claiming “China wants to make a deal so badly”.
This comment came after his previous claim that the US is not “ready to make a deal”.
The recent rhetoric has stoked concerns that the next round of talks, currently scheduled for September, could be called off.
Coming up this week, we may see the GBP/USD exchange rate become a little more data-driven, thanks to a slew of UK economic releases.
This may see the pound rally on Tuesday with the publication of the UK’s latest jobs report.
While the unemployment rate is expected to remain unchanged at 3.8 percent, Sterling may be supported by the accompanying earnings figures, with economists forecasting a sharp acceleration in wage growth in June.
Meanwhile, the focus for USD investors at the start of this week’s session will be on the publication of the latest US CPI figures.
This could see the US dollar strengthen tomorrow if inflation accelerated in July, relieving some of the pressure on the Fed to continue easing monetary policy this year.