GBP/USD Exchange Rate Trends Higher as UK Manufacturing Grows
UPDATE: The Pound US Dollar (GBP/USD) exchange rate is edging higher this morning, following the publication of the Confederation of British Industry’s (CBI) latest industrial trends figures.
Sterling sentiment in rising this morning as the CBI reported UK manufacturing output rose faster than expected in July, with new orders continuing to expand ‘at a brisk pace’.
However at the same time firms appear to be becoming increasing cautious in the face of growing global trade uncertainty, something which slightly dent the advances of the Pound, and prevented the GBP/USD exchange rate from registering any major gains.
GBP/USD Exchange Rate in Holding Position Ahead of BoE Speech
UPDATE: The Pound US Dollar (GBP/USD) exchange rate is trading in a narrow range this afternoon as markets await a speech by the Bank of England’s (BoE) Ben Broadbent later this evening.
With it still being unclear whether the BoE will raise interest rates next month, markets will be looking to glean any information they can, with Sterling likely to surge should Broadbent indicate he is leaning towards a hike.
Meanwhile USD investors continue to await the release of the latest US housing data, with a possible fall in house sales potentially dragging on the US Dollar.
GBP/USD Exchange Rate Slumps as Soft UK Data Weakens BoE Rate Expectations but is Rescued by Latest Trump Tweets
The Pound US Dollar (GBP/USD) exchange rate was hit by considerable losses last week, at one point even breaking below $1.30 to strike its lowest levels since last September.
This was partially down to some political uncertainty in the UK, but was mostly attributed to a run of abysmal economic data, with the UK’s latest wage growth, inflation and retail sales figures all printing below expectations.
This resulted in markets rethinking their expectations that the Bank of England (BoE) was gearing up to raise interest rates, with the odds of an August rate hike tumbling from 80% at the start of the week to just 50% by close on Friday.
Meanwhile the US Dollar roared higher last week as a bullish outlook from Federal Reserve Chair, Jerome Powell, in his testimony to Congress drove considerable demand for USD throughout the first half of the session
However the US Dollar went into full reverse on Friday, with the GBP/USD exchange rate rallying back above $1.31 following a storm of controversial tweets from President Trump.
The comments unsettled markets as Trump lashed out at China and the EU, while also even threatening a currency war as he bemoaned the strength of the US Dollar relative to the Chinese Yuan.
Pound Sterling (GBP) Exchange Rate Muted as Markets Unsettled by G20 Trade Warnings
The Pound US Dollar (GBP/USD) exchange rate is showing limited movement at the start of this week’s session following a meeting of finance ministers and central bankers at the G20 meeting in Buenos Aires over the weekend.
Unsurprising the rise of trade protectionism proved to be a focal point of the meeting, with the G20 warning of major risks to global economic growth.
With the meeting resulting in no progress being made towards smoothing these trade tensions markets have been left largely subdued this morning, with the Pound and US Dollar and most other major currencies currently in a holding pattern.
GBP/USD Exchange Rate Forecast: Surge in US GDP Could Prompt US Dollar Exuberance this Week
Looking to the week ahead, movement in the GBP/USD exchange rate is likely to be dominated by the release of the latest US GDP figures on Friday.
Economists forecast a preliminary reading of second quarter GDP will show that the US economy expanded by an impressive 4.1% in the three months to June, up from 2% growth in the first quarter and likely driving the US Dollar (USD) exchange rate higher.
Meanwhile it’s looking to be a fairly quiet session in terms of UK data this week, however one possible flashpoint for the Pound may be a speech by the BoE’s Ben Broadbent on Monday evening.
This will be the first communication from the bank since last week’s bad run of data, so all ears will be on the speech to see whether the BoE has adjusted its plans for a rate hike next month.