GBP/USD Exchange Rate Steady as White House Economic Adviser Says US Economy in ‘Recovery Stage’
The Pound to US Dollar (GBP/USD) exchange rate is trading around $1.253 this morning, with the pairing holding steady as England reopens its retail sector.
The US Dollar (USD) held steady against Sterling today after the White House’s economic adviser, Larry Kudlow, said on Sunday that the American economy – the world’s largest – is ‘now in a recovery stage’.
Meanwhile, the ‘Greenback’ has also benefited from dampening risk sentiment following reports of an outbreak of Covid-19 cases in Beijing.
As a result, this has seen many investors flock to safe-haven currencies as fears for China – the world’s second largest economy – grow.
Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings, commented:
‘China’s experience so far suggests that it will be a hard road back for the global economy.’
‘We still expect a rebound in the second half, but expectations for a surge in pent-up demand may be disappointed.’
In US economic data, today will see the release of the US NY Empire State Manufacturing Index for June. However, if American economic data shows any signs of improvement, we could see the USD/GBP exchange rate rise.
Pound (GBP) Steady as UK Retail Sector Reopens Boosting UK Economic Recovery Hopes
The Pound (GBP) held steady against the US Dollar (USD) today as England’s retail sector reopens after months of non-essential shops being closed under Britain’s lockdown rules. Consequently, Sterling investors are becoming more hopeful that the UK economy could be on the road to recovery.
GBP has also benefited from growing hopes that the UK’s 2-metre rule could be reduced, with Prime Minister Boris Johnson recently saying that we now have ‘more margin for manoeuvre’.
Chancellor Rishi Sunak told Sky News on Sunday:
‘I can very much understand the positive impact it will have on businesses’ ability to open and thereby maintain the jobs that they have, and make sure all the people that work for them can come back to those jobs and remain employed, and that’s really important to me.’
However, following last weeks gloomy forecasts about the British economy, the GBP/USD exchange rate has remained relatively subdued.
EY Item Club has predicted that the UK economy will shrink by 8% this year.They said:
‘[G]loomier forecast figures reflect a poor economic performance in April due to the lockdown and deeper than expected contraction in quarter one’.
GBP/USD Outlook: Could the US Dollar Rise on Safe-Haven Demand?
Pound (GBP) traders are awaiting tomorrow’s release of the UK ILO unemployment rate report for April. However, with the figure forecast to rise by 4.5%, then we could see Sterling suffer.
Tomorrow will also see the release of the UK’s average earnings figures for April. Nevertheless, with a gloomy outlook this is likely to weigh on GBP.
Meanwhile, US Dollar (USD) investors will be awaiting tomorrow’s testimony from Jerome Powell, the Chairman of the Federal Reserve. Any dovish comments about America’s economy would prove USD-negative.
The GBP/USD exchange rate could begin to dip tomorrow if China’s economy continues to struggle. As a result, we could see investors continue to flock to safe-haven currencies like the US Dollar.
Comments are closed.