- UK currency back in demand after EU Referendum vote – Historic losses remain widespread
- Osborne rules out Conservative leadership bid – Leading party remains provisionally leaderless
- US Dollar slides after Treasury Secretary comments – ‘No crisis’ statement falls on deaf ears
- US GDP stats incoming – Key BoE meeting due later on
The Pound has managed to rise against the US Dollar for the first time since ‘Brexit’ today, though GBP exchange rates still remain low compared to the same time last week.
The US Dollar has taken a turn for the worse on the second day of the week, having been laid low by recent domestic data and a lacklustre US Treasury Department statement.
UK Economic News: Gains Come for the Pound despite Credit Rating Cuts
The Pound has managed to make a number of advances across the board today, although these gains belie the fact that the Pound is still trending at historically low levels against a majority of its peers.
Among the recorded ‘improvements’ have been increases of 0.2% against the Euro (GBP/EUR), 0.6% against the US Dollar (GBP/USD), 0.8% against the Swiss Franc (GBP/CHF) and 1% against the Japanese Yen (GBP/JPY).
This positive performance for the Pound comes against the odds, as recently little good has come out of UK economic news.
In particular, the national credit rating has been cut by a number of agencies, with Standard & Poor’s removing AAA status from the UK and Fitch also lowering its rating from AA+ to AA.
Elsewhere, Chancellor George Osborne has ruled himself out for leading the Conservative party, while controversial Health Secretary Jeremy Hunt, known for his long-standing feud with junior doctors, has stated that he is ‘seriously considering’ throwing his hat into the ring.
US Dollar Drops after Treasury Comments Fall Flat
Although it has rallied strongly since the EU Referendum result on considerable demand for safe haven currencies, the US Dollar has since slumped against the Pound and most other peers, owing to a sudden downwards shift in confidence about the US economy.
Notably, Treasury Secretary Jack Lew has failed to halt this drop off in investor interest, despite stating that:
‘The US economy is doing pretty well. It’s performing in a stable, steady way even though there have been substantial headwinds. There’s no question that this is an additional headwind but it’s something we can manage through, and Europe and the UK can manage through. There’s no sense of a financial crisis developing’.
Gains for the ‘Buck’ have been few, with a 0.3% rise against the Japanese Yen (USD/JPY) being the only notable advance. More prominent have been losses – the US Dollar has declined by -0.6% against the Pound (USD/GBP) and the Australian Dollar (USD/AUD) today, while greater losses have been seen of -1% against the South African Rand (USD/ZAR) and -1.2% against the Polish Zloty (USD/PLN).
Future GBP, USD Forecast: Dovishness in Store from BoE Policy Meeting?
The Pound could be devalued in the near-term, due to the Bank of England (BoE) holding a crucial post-Referendum meeting over policy decisions today. Given that the BoE made highly pessimistic forecasts for a post-Brexit economy, it seems likely that harsh measures will be put into place.
Later on in the day, the US will release its Q1 GDP stats and June consumer confidence printings, with losses forecast for both figures.
Current GBP, USD Exchange Rates
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.3312 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.7515 today.