The Pound US Dollar (GBP/USD) exchange rate has been mixed for much of the day as a hawkish tone from the Federal Reserve (Fed) helps the ‘Greenback’ to strengthen.
The GBP/USD pairing are currently trading around the $1.4129 level as concerns over the Indian variant of coronavirus found in the UK limits Sterling.
Pound (GBP) Limited by UK Coronavirus Concerns
The Pound has found itself limited against the US Dollar as concerns over the Indian variant of the coronavirus causes investors to remain cautious.
Whilst those aged 34-35 have today been invited to receive a dose of the coronavirus vaccine from the NHS, cases of the Indian variant continue to rise.
Almost 3,000 cases of the Indian variant of the virus have now been discovered across the UK, with some scientists warning the variant could cause a third wave of the virus.
The Prime Minister’s spokesperson this afternoon has said it is ‘too soon’ to know whether the variant will derail England’s roadmap out of lockdown:
‘At the moment we are keeping a very close eye on the data. There has still, similar to yesterday, not been any significant changes that currently suggest we need to change our course of action.’
‘We are monitoring that very carefully but it is still too early to make a definitive judgment. We will monitor the data, crucially both on hospitalisation rates in these outbreak areas and the ongoing work on the transmissibility – both that work is ongoing, so we will aim to update next week.’
US Dollar (USD) Supported by Hawkish Federal Reserve
The US Dollar has been supported for much of the day following the publication of the latest Federal Open Market Committee (FOMC) meeting minutes.
The ‘Greenback’ found support from news that policymakers’ may beginning tapering talks at ‘some point’ in the near future, something that had been refuted by Fed Chair Jerome Powell.
The minutes read: ‘A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.’
More so, this afternoon saw the release of the latest initial US jobless claims which has shown that the number people filing new claims for unemployment benefits has fallen to a new pandemic low/
There were 444,000 new initial claims ending the week 15th May the Bureau of Labor Statistics reported.
Pound US Dollar Exchange Rate Outlook: UK Retail Sales in Focus
For Pound investors, tomorrow will see the release of the latest retail sales figures from the UK for April.
Retail sales are forecast to have surged 37% annually as much of the high street reopened during April as lockdown restrictions were eased.
US Dollar traders will look towards the latest preliminary Markit PMI figures from the US. Though the figures are not as influential as the ISM PMI release, the report should give an indication into how the US economy is performing.