Pound US Dollar Exchange Rate Retreats back to $1.37 as Risk-Off Mood Prevails

Pound US Dollar Exchange Rate Slips in Gloomy Trade 

The Pound to US Dollar (GBP/USD) exchange rate is trending lower this morning as softening risk-appetite sees investors favour the safe-haven ‘Greenback’. 

At the time of writing the GBP/USD exchange rate is trading at around $1.3779, down roughly 0.3% from this morning’s opening rate. 

US Dollar (USD) Buoyed by Souring Market Mood 

The US Dollar (USD) is advancing against the Pound (GBP) and the majority of its other peers this morning amidst a prevailing risk-off mood. 

This risk adverse trade appears to be primarily driven by ongoing concerns over the resurgence of coronavirus cases in many parts of the world, as the more contagious Delta variant continues to spread like wild fire, raising fears over the trajectory of the global economic recovery and fueling demand for the safe-haven US Dollar. 

Also limiting market risk appetite this morning is the uncertainty over Beijing’s recent crackdown on domestic firms, which has weighed on equity markets at the start of this week. 

Michael Hewson, chief market analyst at CMC Markets UK, comments: 

‘Concerns about over-reach by Chinese regulators saw equity markets get off to a cautious start yesterday. The clampdown on various sectors within the Chinese economy that rely on overseas investment has seen a flight of capital out of Chinese stocks, particularly those with overseas listings, raising concerns as to what other sectors might be next.’ 

The current abundance of caution is likely to see the US Dollar remain in firm demand today. 

Pound (GBP) Supported by Positive Retail Data 

At the same time, the drop in the Pound US Dollar exchange rate has been tempered somewhat this morning by the publication of the Confederation of British Industry’s (CBI) latest distributive trades index. 

July’s index printed above expectations, coming in at 23 versus the 21 forecast, but still slightly down from June’s three-year high. 

The upbeat release signals another month of solid retail trade volumes and are likely to bolster confidence in the UK’s economic recovery. 

Pound US Dollar Forecast: US Durable Goods in the Spotlight  

Still to come today we have the publication of the latest US durable goods orders release, which could act as a key catalyst of movement in the Pound to US Dollar (GBP/USD) exchange rate this afternoon. 

Economists forecast that order growth will have remained robust in June, with a 2.1% expansion likely to reflect well on the US Dollar. 

A positive reading may also bolster expectations ahead of Wednesday’s interest rate decision by the Federal Reserve, providing additional lift to USD exchange rates. 

Meanwhile, in the absence of any notable UK data, the focus for GBP investors is likely to be on UK coronavirus statistics as traders remain wary of a potential uptick in new infections once the data from the 19 July reopening starts to feed through.