Surge in US Growth Fails to Boost US Dollar (USD) Exchange Rates
UPDATE: A surprise surge in the annualised US gross domestic product failed to shore up US Dollar (USD) exchange rates this afternoon.
Although the headline growth rate accelerated to 3.2%, surpassing market forecasts, the details of the GDP report proved less encouraging in nature.
With the US economy looking set to lose further momentum in the second quarter USD exchange rates were knocked off their bullish trend, moving lower ahead of the weekend.
This offered a boost to the GBP/USD exchange rate, even after the CBI industrial trends orders index fell into negative territory and undermined confidence in the health of the UK economy.
Surprise UK Mortgage Approvals Uptick Limits Pound Sterling US Dollar (GBP/USD) Exchange Rate Downside
The Pound Sterling to US Dollar (GBP/USD) exchange rate recovered some ground this morning after March’s UK mortgage approvals data bettered forecast.
Rather than weakening as expected, approvals instead strengthened to a nine-month high of 39,980 last month.
This suggests a greater level of confidence within the UK housing market, as worries over the prospect of the UK crashing out of the EU without a deal temporarily eased.
Even so, Pound Sterling (GBP) struggled to gain any significant momentum on the back of the data thanks to the underwhelming nature of other recent housing data.
Although UK consumer credit growth also saw an acceleration on the month, rising to 4.1% on an annual basis, this was not enough to give the GBP/USD exchange rate any major boost.
Strong Durable Goods Orders Offered Limited USD Exchange Rate Support
Although Thursday’s US durable goods orders data showed a strong rebound of 2.7% on the month this was not enough to shore up the US Dollar (USD).
Investors instead focused on the underwhelming nature of the latest jobless claims figures, which unexpected rose on the week.
This raised concerns that the US labour market is struggling to tighten further, even though the previous figures were some of the lowest since records began.
Ahead of this afternoon’s annualised first quarter gross domestic product data USD exchange rates proved somewhat muted, with markets bracing for any signs of a slowdown.
US Dollar (USD) Looks for Rally on First Quarter Growth Data
If the gross domestic product data demonstrates a loss of momentum on the quarter this could weigh heavily on the US Dollar today.
With trade tensions between the US and EU escalating markets remain concerned that a deterioration in trade could stifle growth in the world’s largest economy.
On the other hand, if growth picks up to 2.3% as forecast this could see the GBP/USD exchange rate shedding further ground ahead of the weekend.
Even though this level of growth would fall short of the Trump administration’s promised 3% target signs of economic resilience could still benefit the US Dollar.
GBP Exchange Rates Vulnerable Ahead of BoE Meeting
Looking ahead to next week, the Pound looks set to see limited support ahead of Thursday’s Bank of England (BoE) interest rate decision.
No change in monetary policy is anticipated at this juncture, with the Bank’s hands still effectively tied by the lack of clarity over Brexit.
Even so, if policymakers signal a greater level of optimism in the domestic outlook this could help GBP exchange rates to return to a stronger footing.
Any evidence that the BoE is losing confidence in the underlying health of the UK economy may drag the Pound into a fresh downtrend, however.
The GBP/USD exchange rate will also remain vulnerable to any fresh Brexit developments in the days ahead.