Pound US Dollar Exchange Rate Holds Ground despite Rising US Dollar
A rise in demand for safer currencies like the US Dollar (USD) has failed to keep the Pound US Dollar (GBP/USD) exchange rate lower this week so far. The Pound remains appealing due to continued optimism around Britain’s coronavirus recovery hopes.
GBP/USD movement has been a little more mixed over the past week. GBP/USD opened last week at the level of 1.3921 and fluctuated in a relatively narrow range before closing the week near 1.3870.
Movement has been a little more dovish since markets opened this morning, as the pair has been trending slightly lower so far. At the time of writing, GBP/USD is holding its ground and trending close to the week’s opening levels at around 1.3863.
Pound (GBP) Exchange Rate Outlook Remains Strong, Keeping Sterling Afloat
While the US Dollar attempted to push GBP/USD lower, the Pound’s (GBP) resilience on UK economic recovery hopes are keeping the pair from falling further.
Britain is still widely expected to be one of the first major economies to recover from the coronavirus pandemic. While bullishness around Sterling has softened slightly, it persists nonetheless.
What’s more, analysts believe it will remain for now, which is keeping the Pound strong this week. According to Yohay Elam, Analyst at FXStreet:
‘Vaccines allow Britain’s gradual reopening to proceed with confidence, especially after the country reached 50% of all adults.’
US Dollar (USD) Exchange Rates Benefit from Safe Haven Demand
The US Dollar has seen mixed movement over the past week, as market sentiment shifts. Last week’s dovish Federal Reserve policy decision boosted risk-sentiment, but weekend news from Turkey’s central bank has left investors seeking safe havens again.
Turkey’s President, Recep Tayyip Erdogan, sacked Naci Agbal, the hawkish Governor of Turkey’s central bank, and replaced him with Sahap Kavcioglu. Kavcioglu will reportedly follow Erdogan’s preference for more dovish policy.
Anxiety around this news has left investors seeking safer assets today, including the US Dollar.
Pound US Dollar (GBP/USD) Exchange Rate Could Fall if UK Data Disappoints
The Pound to US Dollar exchange rate outlook remains fairly optimistic, but if upcoming UK data disappoints investors may have more reason to sell the pair lower.
Tomorrow will see the publication of one of the week’s most influential UK datasets, the January job market report. If Britain’s job market performed better than expected at the beginning of the year, it could keep the Pound strong.
On the other hand though, weak data could weigh on market optimism for Britain’s resilience and recovery.
If markets remain risk-averse tomorrow, this could lead to even stronger demand for the safe US Dollar.
US Dollar investors will continue to digest Turkey’s central bank situation. Upcoming US home sales and Richmond Fed manufacturing data could also be influential.
A testimony from Federal Reserve Chairman Jerome Powell tomorrow afternoon will be closely watched by Pound US Dollar (GBP/USD) exchange rate investors as well.