Concerns of the heavy impact on the UK economy, which can be caused by the exit procedure of the UK from the EU has accelerated the decline in the Pound in the market. The pair GBP/USD opened the week with a gap down by 60 points and continued to decline losing about 150 points and reaching the lows since 1985.
Earlier this week, Prime Minister Theresa May has said that official procedure of the exit from the EU will start before March 2017 and the number one priority is the control over immigration.
Although country’s economy has survived after the Brexit and there are even some improvements in the economic indicators there is still a risk of slowdown in economic growth in the country, which can be caused by the current account deficit of the balance of payments in the UK.
The negative impact of the Brexit on the economic growth of the UK may continue for the next several years causing the reduction of GDP growth by 2.1% by the end of 2018.
Today the USD is growing in the market after yesterday's positive US macro-economic statistics. According to Monday’s report by the Institute for Supply Management (ISM), PMI in the manufacturing sector rose to 51.5 in September against 49.4 in August. The value above 50 indicates the rise in the activity.
President of Fed Cleveland Loretta Mester suggests to rise interest rates in the near future, which triggers the rise in the USD. Yesterday she said that the minor increase in rate is appropriate, and it can happen during the next two meetings of the Central Bank scheduled for this year. According to CME Group, investors estimate probability of the rate hike in December at 62%.
No important news is expected today. On Friday at 15:30 (GMT+3) US labor market data for September will become known.