GBP/USD Exchange Rate Buoyed by US-China Trade Optimism
The Pound US Dollar (GBP/USD) exchange rate has opened this week on solid footing, as the ‘Greenback’ is undermined by rising risk appetite on the back of speculation that the US and China may be close to resolving their trade dispute.
At the time of writing the GBP/USD exchange rate is has climbed almost 0.3%, propelling the pairing back above $1.31.
US Dollar (USD) Weakens as Safe-Haven Demand Dissipates
The US Dollar (USD) is on the defensive against the Pound (GBP) and the majority of its other peers this morning as a risk-on mood washes over currency markets.
This comes amid renewed optimism that the US and China may be closing in on a potential trade deal following comments from US Treasury secretary Steven Mnuchin suggesting that they are close to the ‘final round’ of talks.
Further buoying optimism were reports that the US has been willing to make concessions to China in order to get a deal through the door, with Washington appearing to have tempered its demands regarding Chinese industrial subsidies.
With some analysts speculating that a deal could be signed off within weeks, it’s not surprising that investors are willing to take a bet on the riskier currencies, leaving the safe-haven US Dollar in the lurch this morning.
GBP/USD Exchange Rate Forecast: Rising UK Wage Growth and Inflation to Strengthen the Pound?
Looking ahead, with Brexit now taking a back seat we may see the Pound US Dollar (GBP/USD) exchange rate start to become a little more data driven in the coming weeks.
This may be kicked off on Tuesday with the publication of the UK’s latest labour figures as economists forecast an uptick in wage growth will bolster Sterling.
Following this will be the release of UK’s CPI figures on Wednesday, where an expected uptick in inflation may buoy GBP exchange rates if it helps to boost speculation that the Bank of England (BoE) may still potentially raise interest rates this year.
Meanwhile the focus for USD investors this week will likely be on the latest US retail sales figures, with the US Dollar likely to accelerate in the latter half of the session if sales growth rebounded in line with expectations in March.