Pound US Dollar Exchange Rate Fails to Trend Higher as Tensions Mount in Ukraine
The Pound US Dollar (GBP/USD) exchange rate is trading sideways today as strong service PMI data boosts the wavering Pound but continued pessimism around the Ukraine crisis caps any further tailwind.
At time of writing the GBP/USD exchange rate is around $1.3130, a modest rise from this morning.
Pound (GBP) Enjoys Mixed Success as Positive Services PMI Data Boosts Pound
The Pound (GBP) is trending sideways against the US Dollar today but is seeing an uptick with the printing of a better-than-expected Service PMI.
The finalised S&P UK Services PMI came in higher than the 61 expected, posting a 62.6 in March, a much-improved figure from the previous 60.5.
The rate of expansion for the services sector was the second strongest since May 1997. The removal of Covid-related restrictions last year saw a welcome boost to the economy, with workers returning to offices and increased travel played a part in output growth.
With inflationary pressures yet to take their toll, a market slowdown is expected for the near future. Weaker optimism linked to the ongoing war in Ukraine will weigh heavily on the GBP/USD exchange rate as President Volodymyr Zelenskyy has announced that a meeting with Putin might not be possible.
US Dollar (USD) Slips despite Global Risk Appetite and Hawkish Stance
The US Dollar (USD) saw a drop against the Pound this morning despite Ukraine news dominating market sentiment, the US Dollar was still reeling from yesterday’s weak factory orders.
Factory orders in the US declined by 0.5% in the month of March, a drop from a 1.5% increase the previous month. The first decline since April of last year amid supply shortages and consumer demand has shifted to services from goods.
Capping the headwinds facing USD is the continued hawkish stance employed by the Fed, with market attention focused on key speeches over the next week, buoying the ‘greenback’ with potential positive data coming out.
Pound US Dollar Forecast: Positive US Data to Mute Further Cable Gains?
Looking ahead, data is thin on the ground for the Pound compared to the US Dollar, but the focus will be on the release of the US ISM Services PMI and Balance of Trade data due out later today. With both sets of data set to be positive, the ‘greenback’ could put more pressure on Sterling.