Pound US Dollar (GBP/USD) Exchange Rate Falls as China Backtracks on Trade Deal
The Pound Sterling US Dollar (GBP/USD) exchange rate slipped, and the pairing is currently trading at an inter-bank rate of $1.3035.
Reports emerged suggesting that China backtracked on nearly all aspects of the US-China trade deal.
According to US government sources, systematic edits were made by China to a nearly 150-page draft trade agreement.
Reversals made by Beijing undermined core US demands, with China reversing its commitments on key issues such as currency manipulation and theft of US intellectual property.
One private sector source said the last round of trade discussions progressed poorly as ‘China got greedy.’
The anonymous source also stated:
‘China reneged on a dozen things, if not more […] The talks were so bad that the real surprise is that it took Trump until Sunday to blow up.
‘After 20 years of having their way with the US, China still appears to be miscalculating with this administration.’
This likely buoyed the safe-haven US Dollar as global risk appetite decreased.
Disappointing UK Retail Sales Dampen Pound (GBP)
Data from the British Retail Consortium (BRC) showed that UK like-for-like retail sales rose by 3.7%.
It revealed that there were signs households were becoming less worried about Brexit as UK consumers splashed out in bars and restaurants.
However, this was at the expense of retailers.
Data showed that shops failed to meet expectations over the Easter holidays.
Commenting on the findings, Helen Dickinson, Chief Executive at the BRC said:
‘Retail sales were below expectation this month as the sunshine over the Easter weekend persuaded many to pursue recreational, rather than retail, activities.’
Sterling (GBP) Slides as UK to Take Part in European Elections
On Tuesday the UK government announced that Britain would take part in European Parliament elections this month.
This likely dampened sentiment in the Pound as it suggests the cross-party discussions between the Conservatives and Labour are making little progress.
In a note to clients, ING analysts wrote:
‘The announcement that the UK will take part in European elections confirms that cross-party Brexit talks aren’t going anywhere fast. This also refocuses attention on a leadership challenge to May.’
Pound US Dollar Outlook: Will the GBP/USD Exchange Rate Slip on Better than Forecast US PPI?
Looking ahead to Thursday, the US Dollar (USD) could rise against the Pound (GBP) following the release of the US Producer Price Index (PPI) excluding food and energy.
If US PPI rises higher than forecast in April, it could buoy the US Dollar.
Meanwhile, later in the day the Federal Reserve Chair, Jerome Powell is due to give the opening remarks at a Fed community development conference.
Both Chicago Fed President Charles Evans and Governor Brainard are also due to speak at the event.
If monetary policy is mentioned, and the tone is overly dovish the Pound US Dollar (GBP/USD) exchange rate could rise.
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