GBP/USD Exchange Rate Slows Near Multi-Year-Best after Forecast-Beating US PMI

GBP/USD Exchange Rate Advances Slow after US Services PMI Beats Forecasts

Updated 15:22 GMT 19/02/2021:

The Pound to US Dollar (GBP/USD) exchange rate’s advances slowed a little this afternoon. It follows the publication of US PMI and housing data, which was fairly strong.

Earlier, GBP/USD touched on a new 2021 high in the interbank region of 1.40, which was also the best level for the pair since May 2018.

While GBP/USD has slipped from those highs it remains in the interbank region of 1.40 at the time of writing.

US services PMI projections from Markit beat forecasts this month, which was fairly notable. Manufacturing came in close to expectations.

(Originally published 11:58 GMT 19/02/2021)

GBP/USD Exchange Rate Hits 1.40 for First Time in Years despite Gloomy UK Data 

Today’s UK retail sales report was much worse than analysts expected, but the Pound Sterling to US Dollar (GBP/USD) exchange rate continues to climb. Investors still find the US Dollar (USD) unappealing as recent US data disappoints. 

Since opening this week at the interbank level of 1.38, GBP/USD has attempted multiple advances. While the US Dollar attempted a mid-week rebound it is now falling again. 

At the time of writing on Friday, GBP/USD is trending above the key interbank level of 1.40. This is the best level for the pair in almost three years, since May 2018. 

The US Dollar could attempt rebound again if upcoming PMI projections beat forecasts. Overall though the Pound (GBP) outlook remains strong despite weak UK retail data. 

Pound (GBP) Exchange Rates Climb Higher Versus US Dollar despite Gloomy Retail Data 

The Pound continued to climb against the US Dollar today, despite UK retail sales coming in worse than expected in January. 

The latest UK retail data indicated that Britain’s consumer activity was hit more than feared by the third coronavirus lockdown.  

However, while retail stats disappointed, markets remain optimistic over Britain’s ability to recover from the lockdown due to the nation’s coronavirus vaccine rollout. 

What’s more, today’s UK PMI projections for February beat expectations, indicating that February’s economic activity has been more resilient than expected as the lockdown continues. 

US Dollar (USD) Exchange Rates Under Pressure as US Data Fails to Impress 

The US Dollar saw a rebound attempt in the middle of the week, but disappointing US data yesterday knocked the wind out of its sales. 

Yesterday saw the publication of US jobless claims data, which fell well short of expectations and indicated that the US job market was still facing big troubles. 

Still, the US outlook is fairly decent overall amid expectations of a big stimulus package from the new Joe Biden government. According to Rodrigo Catril, Senior Forex Strategist at NAB: 

‘The prospect of a massive US fiscal stimulus plus a successful vaccine roll-out are solid arguments to bet on a US recovery this year, 

But the overnight jobless claims data serve as a reminder of the unevenness of the recovery so far.’ 

Pound to US Dollar (GBP/USD) Exchange Rate Could be Knocked by Strong US Data 

For now, investors are awaiting this afternoon’s American session. US PMI projections and housing stats will be published, and the US Dollar could end the week on a slightly better note if these impress investors. 

While Markit’s US PMIs are not as influential as ISM’s, this afternoon’s projections could still be influential to the US outlook if they surprise. 

Stronger data would boost hopes of US economic resilience. This could help the US Dollar to strengthen before markets close for the week. 

On the other hand, weaker US data would make it even easier for GBP/USD to hold this week’s impressive gains, closer to the pair’s best levels in almost three years. 

Looking ahead, Pound investors are eagerly awaiting signals on how quickly Britain’s economy could return from lockdown. If the UK government is more cautious than hoped, some of the Pound’s recent strength could soften. 

Next week’s UK job market report and US growth stats will also be closely watched by the Pound to US Dollar (GBP/USD) exchange rate. 

Josh Jeffery

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