GBP/USD Exchange Rate Steady Despite Growing Confidence in UK Economy
The Pound US Dollar exchange rate held steady this morning following the release of the latest UK house prices data for June. Halifax data revealed house prices fell by 0.5% last month, its first fall since January. The pairing is currently fluctuating around $1.38.
Russell Galley, managing director at Halifax, commented on the data:
‘With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.’
Today’s UK economic calendar is very light. But with the UK Government optimistic about lifting lockdown restrictions in two weeks’ time, we could see the Pound US Dollar exchange rate head higher on growing confidence in the nation’s economic recovery in the coming months.
However, new Health Secretary Sajid Javid has warned that England would enter ‘unchartered territory’ once lockdown measures are lifted.
The Guardian’s analysis of data also predicts that we could see nearly two million people contracting the coronavirus over summer.
As a result, some Pound investors are feeling cautious about the lifting of lockdown measures later this month. If a new variant emerges – resistant to vaccines and more transmissible – then England would face more lockdowns going into autumn and winter.
With the outlook for the UK economy being uncertain, demand for Sterling is ebbing away.
US Dollar Exchange Rate Steady Ahead of Fed Policy Meeting
The US Dollar held steady against the Pound today ahead of the US central bank’s latest policy meeting. Any indications that policy is evolving would effect the USD/GBP exchange rate.
Last month saw the Federal Reserve being more hawkish than expected. Could more hawkishness from the Fed drive-up the ‘Greenback’?
US markets will monitor the Fed’s comments on whether rising inflation is likely to be transitory.
Analysts at Lloyds Bank commented:
‘There will also be attention on the start of discussions about the tapering of asset purchases. The Fed’s press statement continued to say that ‘substantial further progress’ towards the Fed’s goals for inflation and employment needed to be made before asset purchases are cut back. However, markets would something more specific on just what is meant by ‘substantial’.’
In absence of notable US economic data today, markets will monito the Federal Reserve and the global economic situation.
If risk sentiment continues to improve as key economies reopen, then we would see demand for the safe-haven ‘Greenback’ begin to slide.
GBP/USD Exchange Rate Forecast: US Jobs Data in Focus
US Dollar (USD) investors will look ahead to Thursday’s release of the latest US initial jobless claims data.
Any improvement in the outlook for the US labour market would be USD-positive.
Risk sentiment will also drive the ‘Greenback’ exchange this week. Could improving risk appetite drag down the USD/GBP exchange rate?
The Pound (GBP) could head higher against the ‘Greenback’ this week if the outlook for the UK economy continues to improve ahead of the lifting of lockdown measures on July 19.