GBP/USD Exchange Rate Subdued in Face of Impressive US Data
UPDATE: The Pound US Dollar (GBP/USD) exchange rate is treading water this afternoon, following the publication of the JOLTs Job Openings data.
According the June’s release US job openings struck nearly 6.7m at the end of the second quarter – the second-highest reading on record – and bolstering the USD exchange rate as it suggested that the US jobs market continues to expand at a healthy pace.
The upbeat figures cut into the Pound’s attempts to rally earlier in the session and left the GBP/USD exchange rate virtually flat this afternoon.
GBP/USD Exchange Rate Sinks as Markets Spooked by Potential ‘No-deal’ Brexit
UPDATE: The Pound US Dollar (GBP/USD) exchange rate has been hit with another sell-off this morning as markets digest comments from the UK International Trade Secretary, Liam Fox, that a no-deal Brexit is the most likely outcome.
Fox’s comments adds to the growing number of negative Brexit headlines that have been published in recent weeks, with the forecasts of a chaotic Brexit leading even the most optimistic Sterling investors to have second thoughts.
— Mike Dolan (@reutersMikeD) August 6, 2018
This fall in the Pound coincides with a broad-based lift in the US Dollar this morning as flaring trade tensions between the US and China drives investors to safe-haven assets.
GBP/USD Exchange Rate Slumps Following Dovish Rate Hike from BoE
The Pound US Dollar (GBP/USD) exchange rate was hit by some heavy selling last week in the wake of the Bank of England’s (BoE) latest policy meeting.
While policymakers voted unanimously to raise interest rates, the move had already been largely priced in by markets, prompting a collapse in the GBP/USD exchange rate as the bank appeared to signal that this would be the only hike for some time.
Adding to the Pound’s woes was the publication of the UK’s latest PMI readings, which revealed the UK’s private sector got off to a slow start in the third quarter.
Meanwhile the US Dollar jumped last week as the Federal Reserve’s policy meeting proved to be far more upbeat in tone, with policymakers praising the US economy’s recent performance and indicating that further monetary tightening would be require.
However, slightly dampening the USD exchange rate at the very end of the week was the publication of the latest US labour figures, with weaker-than-expected payroll growth dragging on the currency despite a dip in unemployment.
Pound Sterling US Dollar (GBP/USD) Exchange Rate Slumps to 11-Month Low on Warning of ‘No-Deal’ Brexit
The slide in the Pound US Dollar (GBP/USD) exchange rate looks set to accelerate this week, with the pairing striking its lowest levels since last September following some gloomy predictions from the UK’s International Trade Secretary, Liam Fox.
Speaking to the Sunday Times over the weekend, the prominent Brexiteer suggested that the chances of a ‘no-deal’ Brexit are now ’60-40’.
In an interview with The Sunday Times, the international trade secretary put the chances of a no deal departure at “60-40”, squarely blaming the “intransigence” of the European Commission https://t.co/HivzE32db2
— The Sunday Times (@thesundaytimes) August 5, 2018
While Downing Street dismissed the comments, claiming that the government remains confident it can get a good deal, Fox’s comments have spooked GBP investors who fear a ‘no-deal’ Brexit would be disastrous for the UK economy.
With the BoE warning last week that a chaotic Brexit could lead the bank to cut interest rates, any upside to the Pound looks to be rapidly diminishing.
GBP/USD Exchange Rate Forecast: Will Rebound in UK GDP Prompt Sterling to Rally?
Looking to the week ahead, the GBP/USD exchange rate could see some movement on Tuesday should the US see another strong reading in its latest job openings data.
However, the focus for both GBP and USD investors this week will be on Friday with the publication of the latest UK GDP figures and US inflation data.
In terms of the UK’s GDP data, economists are forecasting that the second quarter will have seen growth rebound from 0.2% to 0.4%, an outcome which is likely to help strengthen the Pound (GBP) exchange rate.
However at the same time the latest US CPI figures are expected to show that domestic price growth continued to build in July, with analysts forecasting that inflation could reach as high as 3%, likely strengthening the US Dollar as it bolsters Fed rate hike expectations.