The Pound to US Dollar (GBP/USD) exchange rate has edged higher since markets opened this morning as the UK flash manufacturing PMI rose more than expected during August.
Whilst the US PMI’s may not be as influential as the UK figures, they’re still expected to drive movement in USD exchange rates this afternoon.
What’s Been Happening: Pound Stumbles as UK Inflation Softens
The Pound weakened against the US Dollar throughout last week as softening inflation figures mid-week did nothing to support the appeal of Sterling.
The US Dollar spent the majority of the week trending higher as the latest FOMC meeting minutes paired with a souring market mood provided additional support to the ‘Greenback’.
The GBP/USD pairing ended the week trending lower despite as UK retail sales fell -2.5%, missing forecasts of 0.4% and worrying investors that the UK’s economic recovery is far from over.
Three Things to Watch for This Week
- Coronavirus Developments
A quieter economic week for the Pound will see investors keeping an eye on any further coronavirus developments from the UK throughout the week. Any indication of a reintroduction of lockdown measure in autumn could drag down the appeal of the Pound.
- US Durable Goods Orders
The release of the US’s latest durable goods orders on Wednesday could cause the ‘Greenback’ to stumble if the figures fell -0.2% as expected during July.
- US Personal Spending Data
Towards the end of the week, the US personal spending figures for July are expected to show a softening from 1% to 0.3%, however as the figure remains in growth territory USD exchange rates could find themselves pushing higher heading into the weekend.
GBP/USD Exchange Rate Forecast
This week’s quieter economic calendar for the Pound will see movement largely driven by domestic coronavirus developments moving forward.
A slew of economic data from the US looks to bolster USD exchange rates, though investors will continue to keep an eye on the global market mood.