Predicted Declines in UK PMI Readings could Damage Future GBP/USD Exchange Rate
The Pound to US Dollar exchange rate has recently declined and upcoming PMI data could cause further losses for the UK currency.
These measures of economic activity will come out next week from 3rd April to 5th April, and have been forecast to print poorly in all cases.
As such, if reported levels of UK manufacturing, construction and services sector activity fall then the Pound to US Dollar exchange rate could decline.
The services sector reading is the most important of the three, as it represents the single largest contributor to UK economic growth.
One Year to Brexit: Will GBP/USD Exchange Rate Rise on UK-EU Agreements?
Looking further ahead, there could be a chance of a Pound to US Dollar exchange rate recovery as the countdown to Brexit intensifies.
The UK is set to start leaving the EU in earnest in a year’s time (29th March 2019), so the hope is that progress in Brexit negotiations accelerates before the transition date.
The actual deadline for Brexit talks to conclude is sometime in October 2018, so there is an even shorter period for negotiation than some might realise.
If discussion teams in the UK and EU take the one-year deadline as a sign that talks should start progressing rapidly, then the Pound to US Dollar exchange rate could rise.
There are still a number of major issues to deal with before the EU can start enacting the Brexit process, not least the status of the Irish border.
US Dollar to Pound Exchange Rate (USD/GBP) Predicted to Decline if US PMI Data Disappoints
Much like the UK, there will be high-impact US PMI data out next week which could negatively affect the US currency.
This will be a manufacturing PMI reading out on 2nd April, which is forecast to show a decline from 60.8 points to 60 for the ISM reading.
Analysis company Markit also looks at the US manufacturing sector, however, and their index is forecast to show a small rise in sector activity.
The ISM reading is ultimately considered the more important of the two, so the US Dollar could see an early-week drop against the Pound.
USD/GBP Exchange Rate Volatility Predicted on US Jobs Market Stats
There could also be USD/GBP exchange rate turbulence at the end of the coming week, when payrolls and unemployment data is released on 6th April.
Estimates are for the non-farm payrolls reading, which looks at new jobs added to the economy, to show fewer positions added in March than in February.
That said, the US Dollar could still rise against the Pound on 6th April if the unemployment rate for March falls from 4.1% to 4% as expected.
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