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Pound US Dollar Exchange Rate Forecast: GBP Climbs as Tariffs Take Effect, But Will US Jobs Report Prompt Rally in USD?

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GBP/USD Exchange Rate Strengthens as US Tariffs Begin

The Pound US Dollar (GBP/USD) exchange rate is ticking slightly higher this morning as markets remain wary on the first day of US-China tariffs.

At the time of writing the GBP/USD exchange rate is up nearly 0.2%, placing the pairing just shy of the one-week high struck on Thursday.

Will US Jobs Data Lead to Rise in the US Dollar (USD) Exchange Rate?

At the time of writing the US Dollar (USD) is currently in retreat as US tariffs on Chinese imports finally take effect.

But this could be easily be reversed by the end of today’s session as the US publishes its latest labour report.

Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo said;

‘Participants will be looking to shift their attention from trade matters to the U.S. non-farm payrolls, and if the jobs report is strong, the Dollar stands poised to rise and break out of its recent range.’

Current forecasts suggest US payrolls will have risen by 195,000 in June, a slight fall from the 233,000 rise in May, while the unemployment rate will have held at 3.8%.

Will Messy Chequers Meeting Drive Pound (GBP) Exchange Rate Lower?

The Pound (GBP) meanwhile may face some hurdles today as Prime Minister Theresa May meets with her cabinet at her Chequers estate for a crunch debate on her Brexit blueprint.

May is expected to push for a Brexit solution which allow for ‘ambitious new trade deals’ while also being ‘in the best interests of the UK and the EU’.

Reports suggest this will see the PM present a proposal for the UK to retain parts of EU customs union, while also being allowed to set its own tariffs, a plan members of her own party have branded ‘unworkable’.

GBP investors remain sceptical that the meeting will lead to any kind of breakthrough however, with Sterling sentiment expected to slump if the blueprint is not agreed.

GBP/USD Exchange Rate Forecast: Will Rising US Inflation Lift the US Dollar?

Looking a little further ahead, the GBP/USD exchange rate may tumble next week as the US publishes its latest CPI figures.

Economists forecast the data will reveal US inflation ticked higher in June, with the continued rise in inflationary pressure potentially opening the door to the Federal Reserve pursuing a more aggressive pace of monetary tightening in the coming months.

Meanwhile the Pound may find some strength at the start of next week’s session should the UK’s trade deficit have narrowed in line with expectations in May.