UPDATE: The Pound US Dollar (GBP/USD) exchange rate was left relatively unmoved by UK health secretary Sajid Javid’s confirmation that the nation’s lockdown restrictions will be lifted on 19 July. The pairing is currently fluctuating around $1.38.
Javid said that 19 July would be ‘a major milestone for this country, taking us another step closer to the lives we used to lead.’
However, we could see the GBP/USD exchange rate begin to edge higher later this week if optimism in the reopening of the economy buoys confidence in the UK’s economy.
GBP/USD Exchange Rate Falls as UK GDP Data Misses Forecasts
The Pound US Dollar exchange rate dipped this morning by -0.2% despite growing business confidence as the UK heads towards a lifting of lockdown restrictions on July 19. The pairing is currently fluctuating around $1.38.
According to the auditing company Deloitte over 70% of CFOs are expected boost expenditure and hiring over the course of this year. The poll revealed a seven-year high in business optimism, which could boost the nation’s economic recovery in the months ahead.
Richard Huston, CEO at Deloitte,
‘We’ve seen a huge shift from the uncertainty caused by the pandemic to an appetite for acquisitions, investment and hiring. With the majority of finance leaders expecting a return to at least pre-pandemic levels of demand, the focus is now on innovating and creating new products and services.
‘The businesses that have successfully navigated this pandemic have been able to adapt quickly. Investing in digital technologies will be key to business agility and creating sustainable growth.’
However, following Friday’s publication of the latest GDP data, which missed forecasts of 1.5% growth by slowing to 0.8%, Pound investors have become more cautious about the outlook of the UK’s economy.
US Dollar (USD) Exchange Rate Edges Higher on Fears of Global Economic Slowdown
The US Dollar (USD) rose today as demand for the safe-haven ‘Greenback’ has risen over growing concerns over a global slowdown in economic recovery.
In an absence of any notable US economic data today, however, USD investors are instead monitoring US inflation developments.
Shinichiro Kadota, a senior financial strategist at Barclays, explains:
‘If we see strong data, the Fed could bring forward their projection for their first rate hike further from their current forecast of 2023. That would also mean they have to finish tapering earlier.’
US Dollar traders will await today’s speech from John C. Williams, the president of the Federal Reserve Bank of New York.
Any upbeat comments about the outlook for the US economy – the largest economy in the world – could boost risk sentiment. This would limit demand for the safe-haven USD.
GBP/USD Exchange Rate Forecast: Could Rising US Inflation See a ‘Greenback’ Sell-Off?
US Dollar investors will await tomorrow’s release of the latest US consumer price index for June. Any signs of rising inflationary pressure could prompt the Federal Reserve into action.
Any signs that rising inflation could steer for Fed to raising interest rates in the near future would boost risk sentiment and weaken demand for the ‘Greenback’.
Tomorrow will also see the publication of the US NFIB business optimism index for June. Could an improvement in US business morale boost the ‘Greenback’?
UK economic data is thin on the ground at the beginning of this week. But any signs that Downing Street is on course to lifting lockdown restrictions on July 19 would be Pound-positive.