The Pound to US Dollar (GBP/USD) exchange rate has edged higher since markets opened this morning, as Sterling looks to recover from its disappointing performance last week on the back of better-than-expected UK PMI’s.
The US Dollar could be open to further losses throughout the day as a lack of notable data limits the appeal of the ‘Greenback.’
Last Week: Dovish BoE Limits Sterling Appeal
The Pound had been supported at the start of last week as optimism surrounding the UK’s economic reopening from the coronavirus pandemic strengthened Sterling.
However dovish commentary from the Bank of England’s (BoE) Andy Haldane and Governor Bailey paired with a contraction in UK GDP during Q1 caused the Pound to stumble mid-week.
The US Dollar found itself gaining steadily last week as a slew of positive employment data from the US allowed the ‘Greenback’ to soar.
The GBP/USD pairing ended the week trending higher as the unemployment rate in the US edged up despite a better-than-expected non farm payrolls reading.
Three Things to Watch for This Week
- PMI Figures
Whilst the UK’s services PMI was released this morning there are plenty more PMI’s to be released throughout the week. Tomorrow will see the release of the UK’s construction PMI along with the US ISM non-manufacturing PMI which could provide some much needed support to the US Dollar.
- FOMC Meeting Minutes
Wednesday evening will see the release of the Federal Open Market Committee’s (FOMC) meeting minutes. Whilst the Federal Reserve (Fed) remained hawkish in the latest policy statement the US Dollar could weaken if the FOMC highlight inflation concerns as ‘transitionary.’
- UK GDP Data
Pound investors will keep an eye on the UK’s GDP reading for May at the end of the week. As much of the UK’s economy opened during May traders will be hoping for a strong reading heading into the weekend.
A slightly busier economic week for the GBP/USD pairing could see movement driven by the latest PMI figures for much of the week. More so, the latest initial US jobless claims along with UK GDP data could see both currencies fighting for support at the end of the week.