The Pound to US Dollar (GBP/USD) exchange rate has been rangebound since markets opened this morning as Sterling investors look towards the final lockdown easing decision from Prime Minister Boris Johnson later on this evening.
The US Dollar could be open to losses throughout the day if the global market mood becomes more upbeat and investors ditch the safe-haven USD.
Last Week: Pound Limited on Absence of Economic Data
The Pound had been supported at the start of last week as positive PMI figures from the UK bolstered the appeal of Sterling.
However an absence of economic data from the UK paired with concerns over England’s proposed lockdown easing on the 19 July left the Pound open to losses for much of the week.
The US Dollar found itself gaining steadily last week as a slew of positive data from the US allowed the ‘Greenback’ to soar, however more dovish than expected Federal Open Market Committee (FOMC) minutes alongside a rise in initial US jobless claims towards the end of the week caused the US Dollar to stumble.
The GBP/USD pairing ended the week trending higher as UK GDP figures saw economic growth in the UK continue to expand during May, as a lack of notable data limited the ‘Greenback’.
Three Things to Watch for This Week
- Inflation Rate Figures
Both the UK and US will see the release of inflation rate figures at the start of this week. Whilst US inflation if forecast to have softened to 4.9%, UK inflation is forecast to have edged higher to 2.2% a figure which could drive Sterling higher.
- UK Employment Change Data
Later on in the week the latest employment change figures from the UK could provide fresh impetus to strengthen the Pound further if figures continue to show the UK labour market added 90,000 jobs during June.
- US Retail Sales
US Dollar traders will focus on US retail sales data at the end of the week, which could cause the ‘Greenback’ to stumble. Retail sales are forecast to have fallen for the second consecutive month as consumers divert their attention to services.
The Pound to US Dollar exchange rate will be driven by a range of economic data throughout the week as inflation and employment figures look to support the Pound. Though any further coronavirus developments alongside the global market mood will continue to influence movement in the pairing.