Pound US Dollar (GBP/USD) Exchange Rate Retreats as US Data Impresses
The Pound US Dollar (GBP/USD) exchange rate is trading near a 14-month low as the ‘Greenback’ continues to dominate markets.
A string of US data releases today has so far seen the GBP/USD exchange rate weaken by almost a cent, with US retail sales defying a forecast decrease to remain at a steady 0.5%.
Furthermore, nonfarm productivity for the second quarter has surged from 0.4% to 2.9%, and with the majority of the US’s data releases still to come today, the ‘Greenback’ could further bolster its gains.
The Pound, meanwhile, is struggling to gain momentum today, and uncertainty ahead of the next round of Brexit talks seems sure to see off any comprehensive GBP growth.
Pound (GBP) Exchange Rates Stall as CPI Figures Fail to Impress
The Pound (GBP) has so far failed to achieve momentum this session, with a lacklustre inflation figure not doing Sterling any favours.
The inflation rate increased to 2.5% from 2.4% according to today’s data, but this minor rise has not stoked investor confidence, as the figure is unlikely to inspire a sought-after interest rate hike by the Bank of England (BoE).
Despite seeing a 25 basis point increase earlier this month, economists are already looking forward to the next one, but Brexit uncertainty and weak domestic data are seeing off this possibility.
US Dollar (USD) Exchange Rates Unfazed by Lira Turnaround
Despite seeing a slight dip in form yesterday and early today, the US Dollar (USD) has managed to keep its forward momentum regardless of the stabilising Turkish Lira (TRY).
The ‘Greenback’ saw its value bolstered as Turkey’s financial crisis signalled significant safe-haven demand, but as the Lira continues its steady rebound, investors have relaxed somewhat.
Even though this means decreased demand for USD, the currency has continued its rampant run of form, with analysts predicting that Turkey’s economic situation could see another downturn.
Don‘t be fooled by short-term stabilisation of #Turkish lira. What is happening is a classic currency-and-debt crisis. Despite measures by the government, the crisis is now self-reinforcing, the loss of external confidence linking with domestic currency fluctuations + higher debt
— Jens Bastian (@Jens_Bastian) August 15, 2018
Pound US Dollar (GBP/USD) Exchange Rate Forecast: Brexit Talks to Dictate Sterling Sentiment
The Pound US Dollar (GBP/USD) exchange rate could see some substantial movement tomorrow and Friday, with Brexit talks due to resume in Brussels.
The hope of negotiators is to have an exit plan in place by the middle of October, so in the next round of talks it is essential for the UK and EU to find common ground if there is to be a deal struck. Sterling can be expected to react to developments from these talks as they unfold.
Furthermore, the UK’s retail sales figures are due for publication tomorrow. A substantial upturn in these figures may gain GBP some ground in markets.
On the other side of the pairing, the US Dollar has another busy day tomorrow in terms of data releases, with construction figures expected to show signs of growth, which may see the ‘Greenback’ creep even higher.
Otherwise, developments abroad will continue to dictate safe-haven demand, which would fair USD well should global unrest be exacerbated.