GBP/USD Exchange Rate Flat on US-China Trade Hopes
The Pound Sterling to US Dollar (GBP/USD) exchange rate is stable this morning amidst rising hopes that a US-China trade deal will be signed off next month.
At the time of writing the GBP/USD exchange rate is trading at around $1.2995, virtually unchanged from this morning’s opening rate.
US Dollar (USD) Steady as China Slashes Tariffs on Hundreds of Goods
Trade in the US Dollar (USD) is steady at the start of this week’s session as markets respond to a further easing of trade tensions as China announced plans to cut tariffs on hundreds of imports.
Beijing announced overnight it would be lowering tariffs on over 850 imports from 1st January, with key items on the list including Frozen pork and high-tech parts.
China to cut import tariffs on pork and tech parts https://t.co/CePxpsBZ6U
— BBC Business (@BBCBusiness) December 23, 2019
China’s finance ministry said the aim of the lower tariffs was to ‘increase imports of products facing a relative domestic shortage, or foreign speciality goods for everyday consumption.’
The sudden move has spurred speculation that we may see a similar climb down from the US, and bolstered expectations we could see US President Donald Trump and his Chinese counterpart Xi Jinping sign off on the phase one trade deal, perhaps as soon as next month.
Pound (GBP) Side-Lined in Pre-Holiday Trade
At the same time the Pound (GBP) is stuck in a narrow range this morning as volatility in the currency is stifled by thin trading conditions in the annual pre-Christmas lull.
Kit Juckes, Chief FX Strategist at Société Générale accurately sums up the mood in markets this morning:
‘We’ve made it past the shortest day, but markets are still struggling to wake up and the morning’s FX range could be covered by a handkerchief. Sterling’s bounced a bit, the won is weaker, the market’s got mince pies on the mind.’
And in all honestly given the year the Pound has had in 2019, GBP investors deserve a bit of a break!
GBP/USD Exchange Rate Forecast: US Durable Goods to Bolster the ‘Greenback’?
Still to come today we have the publication of the latest US durable goods orders data, the last high profile data release of 2019.
Economists forecast this afternoon’s data will show a sharp uptick in demand for durable goods last month, with order growth expected to have jumped from 0.6% to 1.4% in November.
The solid jump in order growth will be welcomed by USD investors as another signs that concerns of a prolonged slowdown in the US manufacturing sector may have been a little premature.
Meanwhile, in the UK, the Pound is expected to remain rangebound through much of this week’s session, as political headlines are likely to be few and far between during Parliament’s Christmas recess.