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Pound US dollar exchange rate: GBP recovery cut short amid Brexit customs union fury

Pound US dollar exchange rate: GBP recovery cut short amid Brexit customs union fury

Markets are shunning the pound as Downing Street dismissed suggestions the UK could stay in the EU’s customs union after 2021.


This follows reports published in the Daily Telegraph which suggested Theresa May was planning proposals which would see the UK remain aligned with the EU customs union past the post-Brexit transitional period.


A source within No. 10 said: “We agreed in December and in March to a backstop but the proposal put forward by the EU is completely unacceptable.”


“The Prime Minister and the Government are absolutely clear once the implementation period is over in December 2020 we will be able to not only negotiate and sign trade deals with the rest of the world but also implement them.”



Meanwhile, the US dollar remains in a position of strength this morning thanks to rising US bond yields.


The jump in treasury yields has largely been driven by growing expectations the Federal Reserve could raise interest rates up to three more times in 2018 and have helped USD enjoy a considerable resurgence in recent weeks.


This surge in the US dollar has seen the pound US dollar exchange rate slump over eight cents over the past month.


This has seen the pairing come crashing down from a post-Brexit high to an almost five-month low.



Looking ahead a fairly quiet data calendar may leave the pound US dollar exchange rate directionless through much of today’s session.


This could change at the end of the European session.


A speech by the Bank of England’s (BoE) Andy Haldane could possibly strengthen the pound if he appears optimistic on the chances of a rate hike this year in light of the UK’s improving wage growth.



However, Mr Haldane will not be the only central banker to make an appearance today.


The Fed’s Robert Kaplan also set to speak later this evening.


This could easily see the US dollar offset any gains in pound should Mr Kaplan’s remarks help to further bolster US rate expectations.