Pound movement has been mixed since markets opened this morning. The Pound to US Dollar exchange rate briefly jumped higher on risk sentiment and UK fiscal stimulus news, but quickly fell back again. Brexit uncertainties persist and are keeping the Pound outlook gloomy.
Last Week: UK Fiscal Stimulus Helps Pound Recovery
Investors have been buying the Pound slightly since the beginning of the month. Sterling’s appeal found more support last week, as new UK fiscal stimulus announced by Chancellor Rishi Sunak bolstered Sterling’s appeal.
With Britain’s economy gradually reopening from the coronavirus pandemic, hopes for a rebound in activity also helped the Pound.
On top of this, the US Dollar’s lingering weakness also made it easier for GBP/USD to rise. The US Dollar is a safe haven currency, but a mixture of lingering recovery hopes as well as concerning US coronavirus infections have weighed heavily on the US Dollar’s appeal.
Three Things to Watch For This Week
- Inflation Rate Data
UK inflation rate results from June will be published tomorrow. This will be followed on Wednesday by US stats. If the data shows price pressures rebounding more from the coronavirus pandemic it could bolster currency demand.
2. UK Growth
Tomorrow will see the publication of Britain’s May growth rate results. If the data shows worse than expected growth in May, Britain’s coronavirus outlook could worsen and the Pound could weaken.
3. Coronavirus Developments
The coronavirus pandemic continues to dominate global headlines. If the US situation continues to worsen without signs of calming down, the US Dollar will remain pressured.
Coronavirus developments and shifts in risk-sentiment will remain the core focus for markets. However, the Pound’s potential for recovery could also improve if there is optimistic UK data or Brexit news.