GBP/USD Exchange Rate Falls as US Dollar Investors Await Employment Data for August
The Pound to US Dollar (GBP/USD) exchange rate fell by -0.3% today, with the pairing currently trading around $1.335.
The US Dollar (USD) rose today as concerns around the US elections and the ongoing US-China trade war have restored appetite for the safe-haven ‘Greenback’.
Esty Dwek, head of global macro strategy at Natixis Investment Managers, explains:
‘Any kind of correction is viewed as an opportunity. Most of the risk scenarios today are known.’
In US economic news, today will see the release of the latest ADP Employment Change report for August. Forecasts predict a rise from 167 to 950 thousand.
As a result, we could see the US Dollar head higher as the outlook for American employment improves amid the coronavirus pandemic.
Today will also see the release of July’s US Factory Orders figure, which is expected to rise by 6%.
With the American economic outlook improving, this has provided a boost for the ‘Greenback’ following last week’s more dire predictions for the world’s largest economy.
Pound (GBP) Sinks as Uncertainty Remains Over Brexit
The Pound (GBP) fell today as uncertainty over a post-Brexit trade deal between the UK and the EU continues to weigh on Sterling. Yesterday saw Michel Barnier, the EU’s Chief Negotiator, arrive in London for informal talks with his British counterpart, David Frost.
However, with a lack of clear progress towards a trade deal, GBP investors are concerned about the future of the British economy.
In UK economic news, today saw the release of August’s UK Nationwide Housing Prices figure. This beat forecasts and rose from 1.8% to 2% month-on-month.
Robert Gardner, Nationwide’s chief economist, commented on the data:
‘Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after-effects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.’
Today will see a speech from Andrew Bailey, the Bank of England’s (BoE) Governor. As a result, we could see GBP suffer on any dovish comments about the future of the British economy.
GBP/USD Outlook: Could a Dovish Bank of England Drag Down Sterling?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the final UK Markit Services PMI for August. If this confirms consensus and holds at 60.1, we could see Sterling begin to creep higher.
US Dollar (USD) traders will be looking ahead to tomorrow’s release of the US PMI composite data for August. Any marked improvement in the American economy could further boost the USD/GBP exchange rate.
The GBP/USD exchange rate could continue to fall if the Bank of England’s Governor, Andrew Bailey, is notably dovish in his speech tomorrow.