GBP/USD Exchange Rate Edges Higher as UK Sticks to Lockdown Easing Plan
The Pound US Dollar (GBP/USD) exchange rate rose by 0.3% today despite Health Secretary Matt Hancock rejecting a call to speed up lockdown-easing. The pairing is currently fluctuating around $1.37.
Instead, the Pound (GBP) has benefited from comments from Prime Minister Boris Johnson, who repeated his commitment to a cautious but irreversible plan to ease lockdown in the coming months.
Mr Johnson said:
‘The libertarian in me is also trying to protect people’s fundamental right to life and their ability to live their lives normally and the only way really to restore that for everybody is for us to beat the disease, and the best path to freedom is down the cautious but irreversible road map that we’ve set out – that’s what the freedom-lover wants.’
Sterling traders are however remaining cautious as the EU Vaccine Summit continues, despite heavy criticism of the EU’s threat to ban crucial exports of coronavirus vaccines to the UK.
Former head of the European Commission, Jean-Claude Juncker, commented:
‘This could create major reputation damage to the European Union, who used to be the world’s free trade champion.’
However, with considerable division over the EU’s approach – both within the EU itself and external nations – Pound investors are hopeful that the UK and the EU will secure a compromise on vaccine production.
Consequently, the Pound US Dollar (USD) exchange rate is treading water as GBP investors await the outcome of the EU Vaccine Summit.
US Dollar (USD) Struggles as US Faces High Levels of Unemployment and a Weak Labour Market
The US Dollar (USD) failed to gain against the Pound (GBP) today despite a weaker-than-expected GDP figure for the fourth quarter.
US growth fell below forecasts in the final quarter of last year, with the figure dipping from 2% to 1.9%.
The annualised figure for the fourth quarter, however, beat forecasts, rising by 4.3%.
The world’s largest economy is nevertheless still struggling from high levels of unemployment and a weak labour market.
Today also saw the release of the latest US Initial Jobless Claims, which fell to a better-than-expected 684 thousand.
JPMorgan economist Daniel Silver commented on the report:
‘The claims data can be noisy and we do not want to extrapolate too much signal from just one week of data, but overall it looks like the trend in initial claims has been moving down lately. This suggests that the labor market has been improving in recent months as the drag from COVID-19 has been reduced, in part due to vaccine distribution.’
Pound US Dollar Exchange Rate Forecast: Could Rising UK Retail Sales Boost GBP?
Pound (GBP) traders will be looking ahead to tomorrow’s release of the latest UK Retail Sales report for February.
Any improvement in the UK’s retail sector would boost confidence in the UK’s economy and uplift the Pound US Dollar (GBP/USD) exchange rate.
However, any further signs of tension between the UK and the EU over critical vaccine supplies would be GBP-negative.
US Dollar (USD) traders will be eyeing tomorrow’s publication of the latest Michigan Consumer Sentiment Index for March.
An improvement in the outlook for the world’s largest economy, however, would weaken demand for the safe-haven ‘Greenback’.
The GBP/USD exchange rate could edge higher this week if the outlook for the UK’s economy improves due to falling numbers of Covid-19 infections.