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There has been little UK economic data to refer to so far today, so pound traders have instead been considering an upcoming House of Commons vote.
The topic will be whether the UK should stay in an EU customs union after leaving the EU. Last week saw a majority of peers vote in favour of continued membership of a customs union.
This week’s Commons vote will not be legally binding, but is considered a symbolic indicator of what MPs want from the Brexit process.
Ahead of the ballot, a senior Downing Street source told the BBC: “[The UK] will not be staying in the customs union or joining a customs union [after Brexit].”
As such, this has raised difficulties with the Commons vote because it is still unclear how the government will act if a majority back continued customs union membership.
Over in the US, concerns that a surge in crude oil prices could start to negatively affect the US economy have kept the US dollar trading around £0.714 today.
Although high oil prices are beneficial for US oil exporters, they also mean higher prices for consumers and bring a potential risk of petrol getting too expensive for drivers to sustain.
For the rest of the week, the pound to US dollar exchange rate could be affected by upcoming UK government borrowing data, along with later Q1 GDP estimates.
[The UK] will not be staying in the customs union or joining a customs union [after Brexit]
First up will be the net public sector borrowing reading for March, due out tomorrow.
Current forecasts are for the existing surplus to fall to a deficit of -£1.2 billion.
A surplus has been rare for the current account in recent months, so a drop back into negative figures could alarm traders and weaken the pound.
The week’s other major UK data, Friday’s Q1 GDP growth estimates, are tipped to show a minor quarter-on-quarter downgrade but no year-on-year change.
Some economists now consider GDP figures more economically important than inflation readings, so there may be pound US dollar volatility on the results.
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There will be high-impact US data out before the UK announcements in the form of PMI activity readings, due for release this afternoon.
The overall composite reading is expected to show rising economic activity for April’s estimate, which could mean that the US dollar pound exchange rate rises.
As with the UK, there will also be key US GDP data out in the week ahead.
The quarter-on-quarter Q1 GDP stat on Friday is expected to be revised down, so there might be a late-week pound to US dollar exchange rate advance.
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