GBP/USD Exchange Rate as Improving Risk Sentiment Weighs on US Dollar
The Pound to US Dollar (GBP/USD) exchange rate rose today as demand for the safe-haven ‘Greenback’ remains compromised after the success of President Joe Biden’s $1.9 trillion stimulus package, which passed through the House of Representatives.
The pairing is currently trading around $1.39.
As a result, risk sentiment has significantly improved on growing confidence in both the American economy – the largest in the world – and the global economy at large.
Joe Biden commented in his statement on Wednesday:
‘For weeks now, an overwhelming percentage of Americans – Democrats, independents, and Republicans – have made it clear they support the American Rescue Plan. Today, with final passage in the House of Representatives, their voice has been heard.’
In US economic news, today saw the release of the latest Initial Jobless Claims figure for March, which beat forecasts and fell to 712,000.
JPMorgan economist Bruce Kasman was optimistic about the US economy, saying:
‘We think that the vaccine rollout and downward trend for new COVID-19 cases should allow economic activity to keep picking up over time and that this will result in a downward trend for jobless claims filings through the volatility in the weekly series.’
Pound (GBP) Edges Higher as EU Import Checks are Delayed
The Pound (GBP) rose today after UK firms welcomed news that there would be delays to EU import checks. This has relieved fears that import checks could impede the recovery of the nation’s economy.
Andrew Opie, Director of Food & Sustainability at the British Retail Consortium, explains:
‘We are pleased that the Government has listened to us and postponed border checks until the systems and border posts are ready. With many of the key Border Control Posts currently little more than a hole in the ground, the six-month easement comes in the nick of time.’
However, owing to a lack of notable or influential UK economic data today, GBP investors are turning their attention to the Covid-19 situation.
Daily infection rates are continuing to fall, while those receiving the vaccination against the virus are steadily rising, currently standing at 34.1% of the population.
Those hospitalised because of the virus is down by -3,450 against last week, giving the NHS some much-needed room to cope with the pandemic.
GBP/USD Exchange Rate Outlook: Could Rising UK Industrial Production Boost the Pound?
US Dollar (USD) traders are awaiting tomorrow’s release of the flash US Michigan Consumer Sentiment Index for March.
Any improvement in the US economy could further limit demand for the safe-haven ‘Greenback’.
In UK economic news, tomorrow will see the release of the latest Manufacturing and Industrial Production figures for January.
If this points to a marked improvement in the UK’s industrial and manufacturing sector, then we could see the GBP/USD exchange rate edge higher.