GBP/USD Exchange Rate Sinks Despite Reassurances of a September Brexit Deal
The Pound to US Dollar (GBP/USD) exchange rate fell by -0.3% today, with the pairing currently trading around $1.30.
Sterling fell against the US Dollar (USD) today following concerning comments from Chancellor Rishi Sunak, who warned that extending the furlough scheme would give people false hope. Mr Sunak said, ‘It’s wrong to keep people trapped in a situation and pretend that there is always a job that they can go back to.’
However, Mr Sunak buoyed hopes of a possible Brexit deal, saying ‘we remain confident that it’s possible to get a deal in September’. As a result, GBP investors have become more hopeful over possible progress in UK-EU trade talks.
Today saw the publication of the UK Halifax house prices figure, which rose from 0% to 1.6% month-on-month.
Russell Galley, managing director at Halifax, was upbeat about the data, saying:
‘Confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.
‘However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. A weakening in labor market conditions would lead us to expect greater downward pressure on prices in the medium-term.’
US Dollar (USD) Edges Higher as Hopes Grow for US Economy
The US Dollar (USD) continued to edge higher today following yesterday’s report which showed that fewer Americans had sort jobless benefits in the previous week. As a result, investors have become more optimistic about America’s economic recovery.
In US economic news, today will see the release of the latest nonfarm payrolls figure for July, which is forecast to sink from 4,800 thousand to 1,600 thousand.
Today will also see the publication of the latest US unemployment rate report for July. However, if this continues to ease, then we could see the ‘Greenback’ suffer as investors seek out riskier assets as the world’s largest economy recovers.
Meanwhile, markets are beginning to track the odds in the US Presidential race, with USD investors paying close attention to President Donald Trump’s performance.
Mark McCormick, Global Head of FX Strategy at TD Securities, explains:
‘The USD cares about the election for good reason, reflecting the impact that the Trump presidency has had on global trade policy, geopolitical uncertainty, global markets, and growth.’
As a result, ‘Greenback’ investors are remaining cautious as the nation faces several layers of uncertainty.
GBP/USD Forecast: Could Stronger-Than-Expected UK Retail Sales Buoy Sterling Next Week?
Sterling traders will be looking ahead to Monday’s release of the latest BRC like-for-like retail sales for July. Any improvement in the UK’s retail sector would prove GBP-positive.
US Dollar (USD) investors will be looking ahead to Tuesday’s publication of the US NFIB business optimism index for July. Any improvement in the outlook for the American economy could boost demand for the safe-haven ‘Greenback’.
Tuesday will see the release of the UK’s ILO unemployment rate report for June. If this holds at 3.9% or decreases, then we could see the GBP/USD exchange rate benefit as fears of high unemployment levels are tempered.