GBP/USD Exchange Rate Falls as UK Economy Slowly Recovers
The Pound to US Dollar (GBP/USD) exchange rate dipped this morning, with the pairing currently trading around $1.25.
Sterling failed to gain against the ‘Greenback’ today despite growing hopes for the British economy. This follows news that England is readying itself to reopen gyms, pools, and nail bars as the Covid-19 lockdown eases.
However, the latest figures from the British Retail Consortium point to a worrying trend in retail. UK shoppers were reported to have been 53% lower after shops had reopened in June.
Helen Dickinson, the chief executive of the BRC, commented:
‘With lockdown measures easing, consumers are slowly re-emerging onto their high streets, shopping centres and retail parks. Footfall levels are still well below pre-coronavirus levels; however, the decline was softer than it was in May thanks to the reopening of non-essential stores on 15 June.’
Meanwhile, Brexit has remained in focus today after reports that the European Union’s Chief Negotiator, Michel Barnier, could soften his stance if Prime Minister Boris Johnson shows a willingness to compromise.
Michel Barnier also released a documented that warned British companies to brace for new barriers when selling their products to the EU. As a result, GBP investors have become increasingly cautious as uncertainty continues to weigh on the British economy.
Any signs of a possible compromise between the UK and the EU would prove GBP-positive.
US Dollar (USD) Edges Higher as Investors Seek Out Safe-Haven Currencies on Rising Covid-19 Cases
The US Dollar (USD) has been supported by growing fears of a possible second wave of Covid-19. This follows a surge of infections in the United States and elsewhere.
Analysts at Reuters commented:
‘More than 60,000 new COVID-19 cases were reported across the United States on Thursday, the largest single-day tally by any country in the global pandemic so far, discouraging some American consumers from returning to public spaces.’
US Dollar (USD) investors will be looking ahead today’s release of the US Producer Price Index for June. Any signs of improvement in the US economy could buoy the ‘Greenback’.
Meanwhile, this week’s spike in the number of American coronavirus infections has left many USD investors concerned for the world’s largest economy.
Instead, investors have been looking towards Europe, with the single currency benefiting as uncertainty lingers over America’s economic recovery.
GBP/USD Outlook: Could a Dovish BoE Weigh on Sterling?
US Dollar (USD) investors will be looking ahead to Monday’s announcement of the US Monthly Budget Statement for June. Any indications that the American economy could be on the road to recovery could improve risk-sentiment and drag down the ‘Greenback’.
GBP traders will be keeping a close eye on Monday’s speech from Andrew Bailey, the Governor of the Bank of England (BoE). If the BoE is notably dovish about the UK economy, we could see the GBP/USD exchange suffer.