GBP/USD Exchange Rate Rises ahead of Potential Losses on US GDP Stats
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate has made a marginal gain today, hitting an interbank exchange rate of $1.28.
This minor appreciation comes as US Dollar traders hold off on trading the currency, in the lull before this afternoon’s US GDP data.
Current expectations are for a sharp rise in the Q2 US GDP rate from 2.2% to 4%, which might inspire heavy US Dollar buying and push the Pound lower in the GBP/USD exchange rate.
GBP/USD Exchange Rate Slides as Liam Fox Dismisses No-Deal Brexit Fears
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate has lost ground today, finally breaking out of the previous stalemate to fall in value.
This poor performance comes on a day of scarce UK economic data and statements about the effects of a no-deal Brexit.
International Trade Secretary Liam Fox has echoed Prime Minister Theresa May and claimed that a ‘bad’ Brexit would still be manageable, but GBP traders don’t seem to be convinced.
Fox’s argument has been that gloomy post-Brexit forecasts from Chancellor Philip Hammond are not entirely plausible, given apparent UK economic growth under Brexit conditions so far.
GBP/USD Exchange Rate Static on Rumours of Mark Carney Staying to 2020
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate has failed to improve today, with the UK currency remaining at a stalemate against the US Dollar.
This has been a quiet day so far for UK and US economic news – the latest announcement has concerned the future of the Bank of England (BoE).
The Evening Standard has recently suggested that current Governor Mark Carney could stay on until 2020, instead of departing in 2019 when the UK enters the Brexit transitional period.
Treasury officials have denied this report, however, so there could still be a new BoE Governor during the 2019-2020 phase of Brexit.
While this news hasn’t affected GBP demand much, it is still notable as a 2020 departure for Mr Carney would ensure continuity and consistent economic management during the Brexit process.
PM’s Reassurance about No-Deal Brexit Fails to Break GBP/USD Stalemate
The Pound to US Dollar exchange rate (GBP/USD) has held close to its opening levels today, with Sterling hitting an interbank exchange rate of $1.29.
GBP traders are still unsettled by the prospect of a no-deal Brexit and what it could mean for future UK economic growth, despite recent reassurances.
Prime Minister Theresa May has attempted to quell concerns about an economic crash after a no-deal exit from the EU, saying:
‘The government is … putting in place the preparation that if we are in [a no-deal] situation, we can make a success of it, just as we can make a success of a good deal.’
US Dollar to Pound Exchange Rate Static despite Trump’s NAFTA News
The US Dollar (USD) has remained in a similar stalemate against Pound Sterling (GBP) today, despite signs that a three-way trade deal including the US could be agreed.
The North American Free Trade Agreement (NAFTA) has been under renegotiation since 2017, when US President Donald Trump threatened to tear it up.
NAFTA facilitates free trade between the US, Canada and Mexico, but Mr Trump argued that it was unfair to US producers and exporters.
The latest headline from the White House suggests that a renegotiated NAFTA is closer, with Mr Trump announcing that Mexico has agreed to new terms.
The Canadian government hasn’t agreed to the renegotiated conditions yet, which may be why the US Dollar has failed to appreciate on this latest NAFTA news.
GBP/USD Forecast – Risk of Pound to US Dollar Losses on US GDP Data
For the rest of the week, Pound Sterling US Dollar exchange rate movement may be caused by Wednesday’s US GDP data, as well as Thursday’s US income and spending stats.
Taking these in order, the GDP data could trigger a sharp USD/GBP exchange rate rise as it is expected to show a faster pace of economic growth.
The second estimate for quarter-on-quarter US GDP growth is expected to show an increase from 2.2% to 4%, which would represent a major uptick.
This isn’t the finalised figure so the actual reading could print below 4%, but such an optimistic second estimate could still trigger a USD/GBP exchange rate rally.
Thursday’s US income and spending figures may be less supportive, not least because personal income growth is tipped to dip from 0.4% to 0.3% in July.
Some economists believe that personal spending levels could also slow from 0.4% to 0.3%, so the US Dollar might slip back against the Pound on such news.
The week’s only notable UK data will be Friday morning’s GfK consumer confidence reading for August.
This measurement of consumer sentiment isn’t expected to impress, as economists are predicting a reprint at -10 points.
Any negative reading means that pessimistic respondents are in a majority, so unless the figure surprises with a move closer to the positive range then the Pound could drop.