GBP/USD Exchange Rate Rangebound as US Durable Goods Orders Spikes Concern for US economy
The Pound to US Dollar exchange rate held steady today, with the pairing currently fluctuating around $1.36.
The US Dollar firmed yesterday following the publication of December’s US Durable Goods Orders, which fell below forecasts from 1.2% to just 0.2%.
Amara Omeokwe, an economics reporter for The Wall Street Journal, Washington, commented:
‘Growth in demand for long-lasting manufactured goods slowed in December, as the overall economic recovery lost momentum at the end of last year.
‘New orders for durable goods—products designed to last at least three years—increased 0.2% to a seasonally adjusted $245.3 billion in December compared with November, the Commerce Department reported Wednesday. That was the eighth straight month of gains, although the increase was the smallest since last August.’
As a result, demand for the safe-haven ‘Greenback’ has risen as the outlook for the world’s largest economy becomes more unclear.
Meanwhile, USD investors aware bracing for today’s release of last week’s Initial Jobless Claims, which are expected to fall from 900,000 to 875,000.
Consequently, we could see some of the ‘Greenback’s gains compromised as the outlook for unemployment in in the US improves.
Pound Holds Steady as UK Covid-19 Cases Continue to Put Pressure on NHS
Sterling held steady today owing to alack of notably UK data releases. The GBP/USD exchange rate being affected by UK Covid-19 developments instead.
However, today saw reports that Covid-19 cases must continue to fall to lift pressure on the NHS.
Paul Elliott, professor of epidemiology and public health medicine at Imperial, commented:
‘We are definitely heartened that we are now seeing what looks like a decline in the last week of our survey. But we really need to get prevalence down more quickly because the pressure on the NHS is very extreme right now.’
In UK economic news, industry experts have reported that UK car production slumped to its lowest level since 1984 last year.
British car factory production dropped by 29% compared to 2019.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), said this was ‘the worst in a generation’.
As a result, Pound traders are becoming increasingly concerned about the UK’s ability to recover its economy this year, as Covid-19 cases continue to put pressure on the health service.
GBP/USD Outlook: US Consumer Confidence Data in Focus
US Dollar traders will be looking ahead to tomorrow’s publication of January’s Michigan Consumer Sentiment Index.
Any improvement in the outlook for the US economy, however, could further limit demand for the safe-haven ‘Greenback’.
Nonetheless, if Europe continues to struggle with rising cases of the coronavirus, then we could see demand for USD increase.
Pound investors, meanwhile, will be eyeing the UK’s domestic Covid-19 situation.
Any signs that falling Covid-19 cases could ease pressure on the NHS – or vaccinations are increasing throughout England – would boost the GBP/USD exchange rate.