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Pound to US Dollar Exchange Rate Forecast: Can GBP/USD Recover on UK Wage Growth Acceleration?

Pound Sterling Currency Forecast

The Pound (GBP) has made reduced losses against the US Dollar (USD) on Monday afternoon, but is still making losses in the pairing.

This continued poor performance is down to a prolonged negative reaction to the morning’s disappointing UK data releases.

Additionally, Pound Sterling has been prevented from advancing in the pairing because of rising demand for the US Dollar.

The Trump-Kim meeting is looming and given that an amicable resolution could be imminent, US Dollar trader optimism is growing.

(Last updated 11th June, 2018)

Chance for GBP/USD Exchange Rate Recovery on UK Earnings Data

The Pound to US Dollar (GBP/USD) exchange rate has fallen today, following the release of highly disappointing UK economic data.

Pound Sterling has a chance at recovery in the near-term, however, when UK wage growth data is released on Tuesday morning.

Figures for April are generally expected to show a steady pace of wage growth during the month.

This outcome isn’t set in stone, however, so if the pace of wage growth accelerates by more than forecast then the GBP/USD exchange rate could rise.

A faster pace of wage growth would be good news for the UK economy, as it might mean that household incomes rise further above the pace of inflation.

This would make the UK economy more stable and raise the chances of a Bank of England (BoE) interest rate hike in 2017.

US Dollar to Pound Exchange Rate Forecast: Will Trump-Kim Meeting Bring USD/GBP Advance?

The US Dollar (USD) could rise further against Pound Sterling (GBP) in the near-term, following a historic meeting in Singapore on Tuesday.

US President Donald Trump will be meeting with North Korean leader Kim Jong-un, with the aim of discussing potential denuclearisation.

This has been a sticking point for Mr Jong-un, who has been wary of giving up his nuclear arsenal after the same action led to the downfall of Muammar Gaddafi in 2011.

The summit has had a fractious history; Mr Trump initially withdrew from the meeting in late May, only to change his mind and confirm his attendance more recently.

Speaking before the event, Mr Trump tweeted:

“I am on my way to Singapore where we have a chance to achieve a truly wonderful result for North Korea and the World.

“It will certainly be an exciting day and I know that Kim Jong-un will work very hard to do something that has rarely been done before – create peace and great prosperity for his land.

“I look forward to meeting him and have a feeling that this one-time opportunity will not be wasted!”

If the meeting produces clear results that could lead to a lasting de-escalation of tensions between North Korea and the rest of the world, the US Dollar could appreciate.

Are Further USD/GBP Exchange Rate Gains ahead on Higher US Inflation?

Another factor that could support the US Dollar to Pound (USD/GBP) exchange rate on Tuesday will be US inflation rate figures for May.

Last month’s readings are predicted to show higher levels of inflation on both the month and the year, which could further improve US Dollar exchange rates.

A faster pace of inflation means an increased likelihood of the US central bank, the Federal Reserve, voting for higher interest rates over the rest of 2018.

Fed officials are already tipped to hike interest rates on Wednesday evening, but higher inflation on Tuesday could raise hopes for additional rate hikes later in the year.