GBP/USD Exchange Rate Flat as Trump Suggests China Trade Meeting ‘Unlikely’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is rangebound this morning as hopes of the US and China reaching a trade deal before the 2 March deadline were dampened.
At the time of writing the GBP/USD exchange rate is virtually unchanged, leaving the pairing on track to close the week around a cent down.
Pound US Dollar (GBP/USD) Exchange Rates Flat on US-China Trade Concerns
The Pound (GBP) is trading in a narrow range against the US Dollar (USD) this morning after US President Donald Trump suggested it was ‘unlikely’ he would meet with his Chinese counterpart Xi Jinping before 2 March.
This appeared to indicate that the two sides will not be able to strike a trade deal before the current trade truce expires, at which time US tariffs on Chinese goods will rise from 10% to 25%.
Recent high-level talks between the two powers have been hailed as ‘constructive’ by Beijing, and underpinned optimism that a deal could be struck by the end of February.
However Trump’s comments have dashed these hopes, leaving the US Dollar to trade flatly against the Pound and many of its other peers this morning as it reignited concerns over the impact on the US economy and global growth.
Michael Hewson, Chief Market Analyst at CMC Markets explains:
‘The news that President Trump and Xi won’t be meeting before the March 1st deadline for an increase in tariffs, has raised concerns, in the absence of another extension to the trade truce, that the global economy will struggle to absorb further costs on goods and services.’
GBP/USD Exchange Rate Forecast: Robust UK GDP Figures to Strengthen Sterling?
Looking ahead to next week’s session, the Pound US Dollar (GBP/USD) exchange rate may strengthen on Monday, following the publication of the UK’s latest GDP figures.
Economists currently forecast that despite stalling in October the UK’s economy will have continued to have expanded at a robust 0.6% in the fourth quarter of 2018.
This will be followed by the publication of the UK’s latest CPI figures on Wednesday, which could lend further support to Sterling if inflation holds above 2% as expected.
Of course Brexit could throw a couple of curveballs at the Pound throughout the week, potentially limiting any upside to GBP.
Meanwhile, the US will release its own CPI figures next week, with the US Dollar potentially weakening if domestic inflation continued to slow in January as forecast.
That’s to say nothing of the potential disruption facing the ‘Greenback’ at the end of the week if US lawmakers are unable to avoid another partial government shutdown.