Updated 17/08/21 16:15:
The Pound US Dollar (GBP/USD) exchange rate has lost further traction this afternoon despite disappointing retail sales figures released from the US this afternoon.
Though US retail sales fell -1.1% during July, economists at Bank of America commented on the data, saying:
‘Keep in mind that retail sales do not capture the majority of services spending and therefore understate the resilience of overall consumer spending.’
Original article continues below:
The Pound US Dollar (GBP/USD) exchange rate has been unable to make any gains this morning despite a better than expected unemployment rate reading from the UK.
At the time of writing the GBP/USD pairing are trading around the $1.3811 level as the US Dollar benefits from a risk-off market mood.
Pound (GBP) Struggles Against US Dollar Strength (USD)
The Pound has struggled against the US Dollar since markets opened this morning, despite positive employment change figures from the UK released this morning.
The unemployment rate in the UK edged lower to 4.7% during the second quarter of 2021, better than the 4.8% forecast.
Martin Beck, senior economic advisor to the EY ITEM Club, commented on the latest figures, saying:
‘The speed at which the jobs market is recovering continues to surprise to the upside. Looking ahead, the jobless rate could feasibly creep up in the short-term: an easing of restrictions has made searching for a job easier, and this could result in people moving from inactivity to seeking a job and therefore being picked up in the numbers again.
‘But the risk of a serious increase in joblessness when the furlough scheme closes in September looks low. Job vacancies passed 1 million in July for the first time ever, and the ONS’ latest BIC survey showed the share of workers on furlough falling to 3.7% in late July – the smallest share since the pandemic began.’
However, the strength on the US Dollar has left Sterling unable to capitalise on the positive data today.
US Dollar (USD) Bolstered by Weakening Market Mood
The US Dollar has found itself pushing higher across the board this morning as a weakening market mood bolsters the appeal of the ‘Greenback’.
As global coronavirus cases surge investors aren’t willing to take any risks and instead head towards the safe-haven US Dollar.
Further supporting USD exchange rates today has been the speculation that the Federal Reserve could taper its bond-buying scheme sooner than first thought.
This afternoon’s US retail sales figures could provide further support to the US Dollar if retail sales increase.
Pound US Dollar Exchange Rate Outlook: UK Inflation Rate in Focus
For Pound investors, tomorrow will see the release of the latest inflation rate figures from the UK for July.
If inflation softens as forecast then the Pound could find itself struggling further against the US Dollar during tomorrow’s session.
For US Dollar traders, tomorrow’s Federal Open Market Committee (FOMC) meeting minutes are expected to be the main catalyst for movement in the ‘Greenback’.