GBP/USD Exchange Rate Rangebound as UK GDP Data is Revised Down for First Quarter
The Pound US Dollar exchange rate held steady this morning following the publication of the latest UK GDP data for the first quarter, which contracted by a worse-than-expected -1.6%. The pairing is currently fluctuating around $1.39.
Sterling made no significant gains against the ‘Greenback’ today despite the first quarter revision being far less than the 20% plunge in spring 2020. UK GDP, while relatively weak because of the Covid-19 crisis, is recovering strongly.
Jonathan Athow, deputy national statistician at the ONS, commented on the latest GDP gauge:
‘Today’s updated GDP figures show the same picture as our earlier estimate, with schools, hospitality and retail all hit by the reimposition of the lockdown in January and February, with some recovery in March.’
‘With many services unavailable, households again saved at record levels with only last spring seeing more saved.’
UK unemployment has also dropped with joblessness falling for the fourth month in a row in April as businesses take on more staff because of the easing of lockdown measures.
Pound investors will also await a speech from the Bank of England’s (BoE) Chief Economist, Andy Haldane, this afternoon.
Any upbeat comments about the outlook for the British economy would see the Pound US Dollar exchange rate edge higher.
US Dollar (USD) Exchange Rate Steady Despite Mostly Risk-Off Tone
The US Dollar (USD) continued to benefit from a mostly risk-off tone this week as concerns over the Delta variant of the coronavirus haunts global markets. However, with investors beginning to shrug off fears over another serious outbreak of the virus, demand for the safe-haven ‘Greenback’ is beginning to slip.
In addition to souring risk sentiment, China’s latest PMI data in the non-manufacturing index fell from 55.2 to 53.5, indicating a slowing down in the world’s second-largest economy.
Coming up in US economic data, today will see the publication of the latest ADP employment change report for June.
Analysts at Lloyds Bank commented on the upcoming data:
‘The official payrolls data, however, have disappointed in the past two months, and the overall employment level remains well below pre-pandemic levels, suggesting potentially significant slack in the labour market’.
Any indications of US joblessness falling, however, could see the ‘Greenback’ begin to head higher against the Pound.
Pound US Dollar (GBP/USD) Exchange Rate Forecast: Could Improving Risk Sentiment Limit the ‘Greenback’?
Pound investors will monitor tomorrow’s speech from the BoE’s Governor, Andrew Bailey. Any upbeat commentary about the state of the British economy would be GBP-positive.
Tomorrow will also see the publication of the latest UK manufacturing PMI for June. Could an uptick in factory and industrial data boost the Pound?
In US economic data, tomorrow will see the release of the latest initial jobless claims and ISM manufacturing PMI for June.
We could see the US Dollar exchange rate head higher this week if US economic data points to a strong recovery in the world’s largest economy.
Conversely, improving risk-sentiment could begin to limit demand for the safe-haven USD.