Pound Sterling US Dollar (GBP/USD) Exchange Rate Remains Buoyant despite Better-than-expected US Jobless Data
This morning, the Pound remained buoyed against the US Dollar, as Theresa May survived the no-confidence vote that had been triggered by the leader of the opposition, Jeremy Corbyn.
The Pound Sterling US Dollar (GBP/USD) exchange rate is currently trading at an inter-bank rate of $1.2903.
US employment data this afternoon showed that continuing jobless claims increased by more than forecast to 1.737M from 1.719M.
Initial jobless claims did however slip further than expected to 213K despite forecasts predicting an increase, as it had been suggested that government workers that had been furloughed were going to count as unemployed.
Despite this, the Pound Dollar exchange rate remained elevated.
Pound (GBP) Rallies against USD Despite Lowest Inflation in Two Years
The Pound rallied mid-week as Theresa May suffered a historic defeat in Parliament when her Brexit agreement was rejected by MPs, losing by 230 votes.
Following this, there seemed to be an assumption that the likelihood of a no-deal Brexit had decreased significantly, with this being echoed by Mark Carney, head of the Bank of England (BoE) in his speech yesterday morning.
Carney also reassured investors that Britain’s financial sector remains resilient, stating:
‘We have confidence that the core of the system is resilient to the kinds of shock we could see.’
UK inflation fell to its lowest level in close to two years, as the data showed a rate of 2.1%, in line with forecasts as a result of falling fuel prices. Despite this, the Pound rallied due to Brexit optimism.
GBP/USD Exchange Rate Buoyed Despite Potential Renewal of US-China Tensions
With the US-China trade conflict appearing to cool, signs of further tension emerged as China accused the US of suppressing its high-tech companies.
The US is said to be in advanced stages of inquiry over Chinese tech giant, Huawei’s alleged theft of US trade secrets.
Huawei stated that a dispute had previously been settled between the company and T-Mobile, with a ‘US jury verdict finding neither damage, unjust enrichment nor wilful and malicious conduct by Huawei in T-Mobile’s trade secret claim.’
Hua Chuying, spokeswoman for the Chinese Ministry of Foreign Affairs calling the investigation ‘a violation of free and fair business competition but a violation rule of law.’
GBP/USD Outlook: Will Poor British Retail Sales Weigh Down Sterling?
The end of the week will see the release of the UK retail sales figures, which could see Sterling slip as forecasts suggest that between November and December retail sales have likely contracted.
Friday will also see the US industrial production figures for December, with forecasts suggesting that production will have slowed, only increasing by 0.2% compared to the previous 0.6%, which could limit US Dollar strength.
It is also likely that there will be continued volatility in Pound Sterling exchange rates, as news about Brexit is likely to remain the main catalyst for movement in Pound US Dollar exchange rate.