Pound to US Dollar Exchange Rate Falls Back from Best Levels Once Again
The Pound Sterling to US Dollar (GBP/USD) has touched impressive highs at multiple points this week. However, even as today’s influential UK data beats forecasts, investors are hesitant to let the pair hold at these best levels
GBP/USD has seen largely bullish movement this week. Despite a brief dip back down to the week’s opening levels of 1.30, GBP/USD has also seen two impressive surges to the interbank region of 1.32.
Last night, GBP/USD once again touched highs in the interbank region of 1.32. This was the best GBP/USD levels almost all year, since the beginning of January.
However, despite Friday’s strong UK data, GBP/USD is sliding this morning. At the time of writing, GBP/USD is trending in the region of 1.31 again.
Pound (GBP) Exchange Rates Slip despite Impressive Key Data
The Pound (GBP) slipped against the US Dollar (USD) today, despite most of the day’s major UK ecostats actually being highly impressive.
Britain’s July retail sales results showed consumer activity continuing to rebound even stronger than expected.
Monthly retail sales surged 3.6% and yearly retail sales even came in higher as well, at 1.4%. It indicated that retail activity had already recovered to pre-pandemic levels.
On top of this, Britain’s August PMI projections showed even greater activity rebound than forecast. With a composite figure of 60.3, it was one of the print’s strongest showings in years.
Still, there were downsides to the stats. Namely, there are continued signs that Britain’s job market is going to be hit hard by layoffs in the coming months.
👍UK services & manufacturing PMIs easily beat expectations – signals fastest growth in several years.
👎BUT… also shows rapid deterioration of labour market and companies are getting increasingly worried about that
— Andy Bruce (@BruceReuters) August 21, 2020
This, as well as news that Britain’s national debt had risen to above 2trillion, and a lack of progress in UK-EU Brexit negotiations, limited the Pound’s appeal at the end of the week.
US Dollar (USD) Exchange Rates Benefitting from Rival Weakness
While the Pound (GBP) has been attempting to rebound from lows this week, so has the US Dollar (USD).
The US Dollar is benefitting today from weakness in its biggest rival, the Euro (EUR). This has helped the US Dollar to sustain some recovery attempts this week.
Investors piled into the US Dollar in recovery rebound on Wednesday. It followed the publication of largely unsurprising Federal Reserve meeting minutes.
The minutes were seen as an opportunity to buy back from cheap lows, but the US Dollar’s outlook remains fairly gloomy overall. According to Joe Manimbo, Senior Market Analyst at Western Union Business Solutions:
‘Severe selling that drove the US Dollar to 27-month lows eased after minutes from the Fed’s last meeting were read as less dovish.’
Pound to US Dollar (GBP/USD) Exchange Rate Investors Await US Growth Report
While next week’s UK economic calendar will be quieter, there may be more for US Dollar (USD) investors to react to.
The US Dollar’s recovery attempts have been repeatedly limited, as the US economic outlook remains gloomy due to the broad impact of the coronavirus pandemic on the nation.
As a result, if major US data beats expectations, it could bolster hopes that the US economy has been weathering the pandemic better than feared.
US Dollar investors will be carefully watching next week’s US Q2 growth rate results for a better idea of how the US weathered the pandemic in the second quarter. The data will be published on Thursday.
US durable goods orders due Wednesday, as well as Personal Consumption Expenditure (PCE) inflation data on Friday, may also influence the US Dollar.
As for the Pound (GBP), lasting reaction to the past week’s UK data and lack of Brexit developments will be a focus.
With a no-deal Brexit being perceived as increasingly likely and Britain’s job market expected to see huge job losses soon, the Pound to US Dollar (GBP/USD) exchange rate could slump next week.