The GBP/USD exchange rate is seeing sellers around 1.3760 during early European trading on Friday. The US dollar has gained some ground against the British pound after an agreement between US President Trump and Senate Democrats to prevent a government shutdown. Traders are waiting for the US Producer Price Index (PPI) data scheduled for later today.
Following a deal with President Trump to repeal a spending bill for the Department of Homeland Security, the Senate may vote on a government funding package as soon as Thursday evening. This news led to increased strength for the dollar against the pound.
On Thursday, President Trump indicated he would announce his choice for a new Federal Reserve chairman on Friday, sparking speculation that former Fed official Kevin Warsh might be selected.
“Market response has been largely favorable for the dollar. Warsh’s potential nomination is viewed as a way to maintain the Fed’s independence while indicating that, while some reforms are on the table, significant changes aren’t likely. It also suggests we won’t have the unpredictable Fed that Trump and others have mentioned,” commented Rodrigo Catril, Senior Currency Strategist at the National Australia Bank in Sydney.
The Bank of England is anticipated to maintain interest rates at 3.75% during their meeting next week, following a 25 basis point cut in December. Economists predict that any subsequent rate cuts will occur no earlier than April or June, with year-end rates projected to be between 3.0% and 3.25%.
