GBP/USD Exchange Rate Slumps in spite of US Manufacturing Output Contracting Further
Despite the ISM Manufacturing Survey revealing that production within the US had contracted further than expected, at 48.2 rather than 49, the US Dollar (USD) has nevertheless been making fresh gains against rivals this morning. As such, the Pound Sterling to US Dollar (GBP/USD) exchange rate has been on a downtrend around 1.4690.
Earlier…
As the Chinese economy has continued to demonstrate weakness today the Pound Sterling to US Dollar (GBP/USD) exchange rate has remained on an uptrend, in spite of discouraging UK data.
UK Manufacturing PMI Disappoints Expectations as Demand for Pound Sterling (GBP) Softens
The outlook of the Pound (GBP) has not seen a particular improvement on Monday as the final UK Manufacturing PMI of 2015 fell short of forecast, printing at 51.9 rather than the expected 52.8. The slowing expansion in production does not seem to bode well for fourth quarter GDP, suggesting that the prospects of the domestic manufacturing sector are more limited. With adverse weather conditions continuing to put a dampener on the UK economy a sharper than anticipated increase in November Mortgage Approvals did little to inspire increased faith in Sterling.
US Dollar (USD) on Bearish Trend as Chinese Stock Market Volatility Worries Investors Today
However, the Pound Sterling to US Dollar (GBP/USD) exchange rate has been making gains this morning thanks to ‘Greenback’ softness. Pundits have been deterred from buying into the US Dollar after Chinese stock markets were closed early upon hitting a 7% fall in values. As the latest Chinese Manufacturing PMI also disappointed expectations, demonstrating the tenth consecutive month of contraction within the world’s second largest economy, global downside risks remain evident which could prompt the Fed to hold off on further interest rate hikes. Consequently the ‘Buck’ has been on a bearish trend, in spite of the more hawkish tone of policymakers in recent comments.
GBP/USD Exchange Rate Forecast: US Manufacturing Data Predicted to Trigger US Dollar Rally
This afternoon’s US Manufacturing Survey could prompt a rally for the US Dollar should production be shown to have edged higher on the month in December. Due to the data-dependant approach to future interest rate moves signalled by the Fed, any improvement in the domestic economy is likely to outweigh more negative global data. A stronger showing would offer fresh support to the central bank’s planned path of monetary tightening, bolstering demand for the ‘Greenback’.
While tomorrow’s UK Construction PMI is predicted to show a healthy uptick in sector expansion in December the Pound may still struggle to maintain its recent gains against rivals. As construction accounts for a relatively limited portion of the UK’s GDP any reassurance from a stronger figure is likely to be somewhat limited, particularly ahead of an expected decline in Wednesday’s Services PMI.
Current GBP, USD Exchange Rates
At time of writing, the Pound Sterling to US Dollar (GBP/USD) exchange rate was on an uptrend around 1.4757, while the US Dollar to Pound Sterling (USD/GBP) pairing was trending lower in the region of 0.6776.
Comments are closed.