Home » GBP » Pound US Dollar Exchange Rate Attempts Rebound as UK Economy Continues to Reopen

Pound US Dollar Exchange Rate Attempts Rebound as UK Economy Continues to Reopen

Pound US Dollar Exchange Rate Jumps but Gains Limited Ahead of US Data 

Investors bought the Pound US Dollar (GBP/USD) exchange rate today, as the Pound (GBP) benefitted from the latest UK reopening developments. The US Dollar (USD) is steadying as well though, which is limiting the pair’s gains. 

Last week saw another week of volatile movement from GBP/USD. GBP/USD opened the week at the level of 1.3830 and briefly jumped to a fortnight best, before spending the rest of the week tumbling. The pair closed the week at 1.3707. 

After opening this week, GBP/USD briefly dipped and touched on a monthly worst of 1.3672. However GBP/USD is since attempting a rebound, and trends a little higher in the region of 1.3764 at the time of writing. 

Pound (GBP) Exchange Rates Strengthen as UK Economy Reopens 

Last week saw the Pound plummet. Investors sold the British currency from its best levels in profit-taking, and the currency tumbled throughout the week. 

However, Sterling’s losses eventually calmed. Investors are hesitant to keep selling the Pound further, amid persisting optimism about Britain’s economic outlook and recovery potential. 

Hopes for the UK to recover from the coronavirus pandemic continue to support Sterling today. More of Britain’s economy reopened today, including more bars and shops, which is keeping the Pound appealing. 

US Dollar (USD) Exchange Rates Steady as Markets Await Key Data 

Investors also sold the US Dollar from highs last week, though the Pound’s selloff was ultimately the bigger of the two. As with the Pound, the US Dollar’s movement has calmed slightly this week. 

The US Dollar is struggling to avoid losses against the Pound however, as investors are hesitant to move on the US currency in anticipation of major incoming data. 

Some analysts speculate the US Dollar rebound has already run out of steam. According to Analysts at ING: 

‘At this stage, the Dollar has lost all its positioning “advantage”, having a neutral speculative positioning, which suggests we should no longer see Dollar rallies against most G10 currencies exacerbated by the unwinding of USD shorts,’ 

Pound US Dollar (GBP/USD) Exchange Rate Investors Await Key US Inflation Report 

Movement in the Pound to US Dollar exchange rate may be limited for now, as both currencies are steadying from last week’s sharper movements. 

Sterling remains appealing, but the rebound on the back of UK reopening news may be limited. This is because the reopening has likely already been priced into Sterling’s outlook. 

Some key UK data could influence the Pound tomorrow if it surprises investors. UK growth rate data from February could make the Pound even more appealing if it beats forecasts, but an unsurprising report may keep the Pound trajectory unchanged. 

US Dollar investors on the other hand are highly anticipating upcoming US inflation data. Markets continue to speculate that a rise in inflation could lead to tighter US monetary policy. 

Analysts at MUFG said: 

‘We are set to see the first evidence of the much anticipated surge in inflation that is widely expected through the coming months as base effects from a year ago begin to take effect as the sharp declines post-COVID start to fall out of the annual calculations,’ 

As a result, upcoming US data could be the main driver for the Pound US Dollar (GBP/USD) exchange rate in the coming week. 

Comments are closed.