Pound US Dollar (GBP/USD) exchange rate is wavering this morning, amid continued USD strength and UK economic uncertainty.
At the time of writing the GBP/USD exchange rate is trading at $1.2805. Virtually unchanged from this morning’s opening rate.
Pound (GBP) Wavers amid Bleak UK Outlook
The Pound (GBP) continues to fluctuate today, trading in a wide range against its peers. Ongoing worries surrounding the health of the UK economy remain prominent amid a lack of notable UK data.
September’s finalised manufacturing PMI came in as expected yesterday, ticking up slightly from August’s 39-month low. Although returning a marginally better-than forecast reading.
The manufacturing PMI is sparked little change in Sterling. Instead underpinning concerns of a UK economic slowdown. Among some of the worst readings in the last 14 years, the disappointing figures signal to a constriction in economic activity.
Dr. John Glen, Chief Economist at the Chartered Institute of Procurement & Supply, commented:
‘Uncertainty in the market and low demand resulted in a difficult end to the quarter for the manufacturing sector, with today’s results putting paid to any hope that falling inflation was a sign of better things to come’.
Elsewhere, the Pound remains vulnerable to risk sentiment, with a downbeat mood possibly pressuring the increasingly risk-sensitive Pound. With global borrowing costs on the rise and China’s property sector heading towards meltdown, GBP may be driven by cautious trade.
US Dollar (USD) Strengthens amid Treasury Yield High and PMI Data
The US Dollar (USD) is consolidating its position this morning, after climbing to multi-month highs on Monday.
US Treasury bond yields hit a 16-year high yesterday. This surge followed the publication of the finalised US manufacturing PMI figures for September, which although still in contraction territory, came in higher-than-forecast.
This boosted confidence in a resilient and healthy US economy, which stoked expectations the Federal Reserve will raise interest rates again when it next meets in November, leaving the safe-haven economy to catch bids throughout yesterday’s session and well into today.
Gennadiy Goldberg, head of US rates strategy at TD Securities said:
‘Signs of robust growth in the US make rate cuts from the Federal Reserve over the coming years less likely, hitting Treasuries. The market is taking every strong data print as an indication that the landing won’t be as hard as it initially thought.’
Pound US Dollar Exchange Rate Forecast: Labour Data to Dent USD?
Looking ahead, the latest Job Openings and Labour Turnover (JOLT) survey is due this afternoon. With an expected slowdown in the US labour market, Fed hike bets may be weakened, undermining the ‘Greenback’s’ recent gains.
This will be followed by, the UK’s finalised Services PMI on Wednesday, and may continue to underpin UK economic insecurity, further denting GBP. With UK data otherwise thin on the ground this week, Sterling may continue to be driven by external factors and risk sentiment.