GBP/USD Exchange Rate Rangebound as UK PMIs Beat Forecasts in June
The Pound to US Dollar (GBP/USD) exchange rate held steady today, with the pairing currently fluctuating around $1.27.
Sterling failed to gain on the US Dollar (USD) despite stronger-than-expected PMI figures for July. The UK Services PMI beat forecasts by rising from 47.1 to 56.6, while the Manufacturing PMI rose to 53.6.
Duncan Brock, the Group Director at the Chartered Institute of Procurement & Supply (CIPS) was optimistic in his analysis, saying:
‘Following last month’s good results, recovery in July across the manufacturing and services sectors gathered pace as the PMI figure made a sudden jump to show the fastest growth since June 2015. This momentum was fuelled by the release of pent up demand as clients and customers returned to spending and businesses were able to open their operations as staff returned.’
Today also saw the UK’s retail sales for June beat forecasts, with the month-on-month figure rising from 12.3 to 13.9%. As a result, GBP investors are becoming increasingly optimistic that the British economy is on the road to recovery.
US Dollar (USD) Steady as Safe-Haven Demand Increases
The US Dollar (USD) was rangebound against Sterling today despite rising demand for the safe-haven ‘Greenback’ as US-China trade tensions leave global markets feeling jittery.
After Beijing stated that it will ‘take necessary measures to safeguard its legitimate rights and interest’, US-China trade tension is looking increasingly set to escalate.
Moreover, US President Donald Trump dismissed ratifying a US-China trade deal by saying it had become ‘much less to me’. As a result, investors are flocking to safe-haven currencies as the relations between the world’s two largest economies breakdown.
Meanwhile, US Treasury Secretary Steven Mnuchin has commented that the White House could plan for another $1 trillion to stimulate the US economy. As a result, ‘Greenback’ investors are becoming more hopeful that the US could see an economic recovery in the months ahead.
In US economic news, USD investors will be awaiting today’s release of the US Markit PMI Composite for July. Any improvement in the US economic outlook could boost the US Dollar (USD).
GBP/USD Outlook: Could Worsening US-China Trade Tensions Boost the US Dollar Next Week?
US Dollar (USD) investors will be looking ahead to Monday’s release of the latest Durable Goods Orders for June. If these show any signs of easing off, then we could see the USD/GBP exchange rate fall.
Meanwhile, Sterling investors will be awaiting Tuesday’s release of the CBI Distributive Trades survey for July. Any signs of improvement could further buoy Sterling as the UK’s economic outlook improves.
The GBP/USD exchange rate will also remain sensitive to global risk sentiment. If US-China trade tensions worsen, then we could see the US Dollar (USD) rise.