Pound Sterling US Dollar (GBP/USD) Exchange Rate Muted as US Home Sales Fall to One-Year Low in South
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate was left flat after disappointing US home sales data. This left the pairing trading at around $1.3057.
Data revealed that US new home sales dropped for the third consecutive month in December. This was likely due to a shortage of more affordable homes.
The Commerce Department revealed sales slumped by -0.4%, and sales in the South dropped to a one-year low.
However, the overall housing market remains supported by lower mortgage rates, and US financial markets saw little movement following the data.
Pound Sterling US Dollar (GBP/USD) Exchange Rate Muted as Wuhan Virus Spreads
The Pound Sterling US Dollar (GBP/USD) exchange rate remained flat, as risk appetite took a hit, leaving the pairing trading at around $1.3067.
The pairing was left flat as investors flocked to safe-haven currencies as worries about the spread of the Wuhan virus increased.
China revealed the death toll of the Wuhan coronavirus is now over 80, and the virus has spread to more than 10 countries.
Commenting on this, Yukio Ishizushi, foreign exchange strategist at Daiwa Securities, Tokyo, noted:
‘There is a lot of uncertainty about how much further the virus will spread, and this is behind the moves in the currencies.
‘The risk-off mood is likely to continue for a while.’
Sterling (GBP) Under Pressure Ahead of BoE Meeting
The Pound remained flat against the Dollar this morning despite increasing pressures from this week’s Bank of England (BoE) meeting.
With the bank closer to slashing rates than ever compared to any time in the last three years, GBP remained under pressure.
Despite the release of better than expected PMI data on Friday showing the UK private sector returned to growth for the first time since August, the chance of a cut remains high.
Markets currently expect a 55% chance of a cut, compared to a 70% chance predicted a week ago.
NABE: US Labour Market May Have Peaked
The Dollar remained flat on Monday after a US business survey suggested the labour market may have peaked.
The survey from the National Association for Business Economics (NABE) suggested that US job growth could slow over the course of 2020.
NABE Business Conditions Survey Chair, Megan Greene noted:
‘For the first time in a decade, there are as many respondents reporting decreases as increases in employment at their firms than in the previous three months.
‘However, this may have been due to difficulty finding workers rather than a pullback in demand.’
Pound US Dollar Outlook: BoE Rate Cut in Focus
Looking ahead to this afternoon, the US Dollar (USD) could edge higher against the Pound (GBP) following the release of US home sales data.
If the number of new home sales in the US increases more than expected, the ‘Greenback’ will receive a boost.
Meanwhile, Sterling is likely to remain under pressure ahead of the Bank of England’s (BoE) monetary policy meeting.
If the chances of a BoE rate cut remain at current levels, it is likely the Pound US Dollar (GBP/USD) exchange rate will slump.