The Pound to US Dollar (GBP/USD) exchange rate has edged higher since markets opened this morning, though way below levels seen at the start of last week as hopes over the UK’s economic recovery from Coronavirus bolster the appeal of Sterling.
The US Dollar could regain traction later on as a lack of economic data from the UK could limit Sterling’s appeal throughout the day.
Last Week: Dovish BoE causes Pound to Stumble
The Pound had been supported at the start of last week as positive CBI industrial trends orders jumped to their highest level in over 30 years and flash PMI figures from the UK mid-week supported Pound sentiment.
However a dovish outlook from the Bank of England (BoE) towards the end of the week caused the Pound to stumble against many of its major rivals.
The US Dollar was itself limited in any gains as a more positive upbeat market mood and lacklustre economic data did nothing to support the ‘Greenback.’
The GBP/USD pairing ended the week trending lower as a disappointing consumer confidence index from the UK weakened the Pound further.
Three Things to Watch for This Week
- Manufacturing PMI’s
Towards the end of the week the release of the most recent Markit Manufacturing PMI from the UK along with the ISM Manufacturing PMI from the US could cause both currencies to find support as the figures are expected to show a sustained growth in the sector.
2. US ADP Employment Change
Mid-week will see the release of the latest ADP employment change figures from the US which are thought to show 600,000 jobs were added to the US economy during June. If the figure meets, or beats, forecasts the US Dollar could see renewed support.
3. Coronavirus Developments
Pound investors will continue to keep an eye on any further coronavirus developments in the coming days, as cases continue to rise in the UK investors will look to see if health secretary Sajid Javid can give an updated insight into lockdown easing.
GBP/USD Outlook
A slightly quieter economic week for the GBP/USD pairing could see movement driven more by the global market mood and coronavirus developments for much of the week. However, the latest manufacturing PMI’s could cause movement in both currencies.