Strong US Manufacturing Keeps Pound to US Dollar (GBP/USD) Exchange Rate Near Monthly Worst

Pound to US Dollar Exchange Rate Steadies Slightly after Monday Plummet

Yesterday’s session saw the Pound Sterling to US Dollar (GBP/USD) exchange rate shed all of last week’s gains. This morning’s movement has been a little steadier, but Brexit uncertainty continues to weigh on Sterling (GBP) while the US Dollar (USD) remains appealing.

Last week saw GBP/USD advance from the interbank level of 1.30 to highs of 1.32 throughout the week. GBP/USD’s weekend highs were its best levels since the beginning of January.

However, GBP/USD quickly shed all those gains again when markets opened yesterday, slumping two cents. While GBP/USD losses steadied today, the pair is currently trending near a monthly interbank low of 1.29.

Investors are hesitant to keep selling the Pound too much without fresh downside pressure. Meanwhile, the US Dollar is keeping the pressure up as well as it is supported by yesterday’s stronger than expected US PMI data.

Pound (GBP) Exchange Rates Steady from Hard Brexit Fear-Inspired Plummet

The Pound (GBP) is floundering today. It follows yesterday’s significant losses, that saw it quickly shed most of the advances that had been made since December.

While Sterling is holding above its worst levels since December for now, the British currency remains under heavy pressure.

Resilience in the US Dollar (USD) is part of this, but revived Brexit fear that throttled the Pound yesterday persists as well.

UK Prime Minister Boris Johnson has said that Britain will not remain aligned with EU rules after the end of the Brexit transition period. Concerns that this could lead to a hard Brexit at the end of this year sent Sterling plunging.

Sterling has been able to avoid deeper losses thanks to some decent UK manufacturing and construction data published since yesterday. Brexit fears remain a significant downside pressure however.

US Dollar (USD) Exchange Rates Supported as US Manufacturing Beats Forecasts

Yesterday was a bullish session for the US Dollar (USD). A combination of risk-sentiment and US data bolstered demand for the currency.

Markets have begun to calm over concerns of a coronavirus outbreak. Coronavirus concerns left the US Dollar’s safe haven rival, the Japanese Yen (JPY), much stronger last week. As a result, calming markets saw the US Dollar regain ground from the Yen.

On top of being supported by risk-sentiment though, demand for the US Dollar was further boosted by strong US data published yesterday.

ISM’s latest US manufacturing PMI report beat forecasts of lightening to 48.5. The data printed a surprise rebound of 50.9, ending months of contraction for the print.

It made markets more hopeful that the US economy was resilient amid US trade protectionism and US-China trade uncertainty.

Pound to US Dollar (GBP/USD) Exchange Rate Could See Further Pressure from US Data

The Pound (GBP) continues to be pressured by Brexit uncertainties. Even as the British currency steadies, it may only see limited support if tomorrow’s UK data impresses investors due to the lingering concerns about UK-EU relations.

Tomorrow will see the publication of UK services and composite PMIs, which will give investors a better idea of how much Britain’s economy is rebounding in 2020 so far.

With data potentially only having a limited impact on the Pound amid lingering Brexit jitters, GBP/USD may be influenced more by major upcoming US data.

This afternoon will see the publication of US factory orders from December. Tomorrow will follow with US non-manufacturing PMI data and trade balance results.

If US data is stronger than expected throughout the week, it could lead to fresh hopes of a more optimistic Federal Reserve. This would boost the US Dollar and keep the Pound to US Dollar (GBP/USD) lower.

Josh Jeffery

Contact Josh Jeffery


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