GBP/USD: MPs return to Parliament will bring volatility to UK assets

UK assets, particularly the pound, are expected to see increased volatility in September when MPs return to the House of Commons next month where lawmakers will look to push for a no confidence vote in the government.

Volatility is likely to increase across a host of UK assets, particularly the price of British sterling, in September when MPs return to Parliament after the summer recess, IG Senior Market Analyst Chris Beauchamp said.

British lawmakers will return to the House of Commons on September 3 and are expected to push for a no confidence vote in the Conservative-led government, he added.

GBP/USD: remains firmly in a downtrend

The pound against the US dollar has enjoyed a strong rally from the lows of August.

However, the currency remains firmly in a downtrend over the last five to six months, with it falling from $1.33118 levels in mid-March to low of $1.20224 on August 12.

The pound closed at $1.22864 against the dollar on Tuesday.

Weaker dollar could see sterling trade higher

If the dollar weakens, however, the pound could see gains, particularly if the US-China trade war continues to worsen and US President Donald Trump piles further pressure on the Federal Reserve to slash interest rates.

So far, the US central bank has denied Trump the rate cuts he has demanded, with policymakers unwilling to lower rates to assist the president in his negotiations with Beijing.

‘The Federal Reserve’s policy decisions are guided solely by its congressional mandate to maintain price stability and maximum employment,’ a Federal Reserve spokeswoman said on Thursday. ‘Political considerations play absolutely no role.’

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