Pound US Dollar Exchange Rate Sees Fresh Advance Attempts
Strength in both the Pound (GBP) and US Dollar (USD) has been mixed, and the Pound US Dollar (GBP/USD) exchange rate has seen volatility as a result. With key UK growth data due on Wednesday, the Pound could see further gains this week.
Last week was a particularly mixed week for GBP/USD. After opening the week at the level of 1.3868, GBP/USD plummeted and touched on a monthly low of 1.3675, before rebounding towards the end of the week.
GBP/USD closed last week at the level of 1.3788, recovering around half of the week’s losses. This morning, GBP/USD is continuing to attempt a recovery and is trending in the region of 1.3836.
While Sterling investors await UK growth data, US Dollar investors are awaiting key US Non-Farm Payroll data at the end of the week.
Pound (GBP) Exchange Rates Attempt Fresh Advances as UK Continues to Reopen
The Pound has seen weeks of strong performance. Speculation that Britain will be one of the first major economies to recover from the coronavirus pandemic continues to support the British currency.
This week, England’s gradual economic reopening continues. Groups are now allowed to meet outside.
According to Yohay Elam, Analyst at FXStreet, reopening continuing without interruption so far continues to support the Pound:
‘Thirty million Brits have received at least one vaccine dose – and that serves as a shot in the arm to Sterling. The nation now allows larger gatherings and other activities that were prohibited until now, moving cautiously while cases continue falling.’
US Dollar (USD) Exchange Rates Remain Appealing amid US Outlook and Bond Yields
Like the Pound, the US Dollar has been broadly appealing in recent weeks. Over the past week or so especially, a fresh rise in coronavirus ‘third wave’ fears and strong US data have made the US Dollar highly appealing as a safe haven currency.
US bond yields have been rising as well. This is making markets more confident that US inflation will rise as well, which is leaving the US Dollar with even stronger demand.
US inflation and economic expectations continue to rise, even after the Federal Reserve maintained a fairly dovish tone in its most recent policy decisions and comments.
Pound US Dollar (GBP/USD) Exchange Rate Movement May Be Limited as Investors Await Key Data
For now, the Pound and US Dollar’s strength may be limited. Both currencies are appealing on domestic recovery hopes, but with key data due in the coming sessions investors may be hesitant to take big movements for now.
Tomorrow will see the publication of US consumer confidence data from CB.
Wednesday’s data will be even more influential, with Britain’s Q4 growth rate results due. Then, towards the end of the week, US Dollar investors will be highly anticipating US Non-Farm Payroll data.
Some analysts believe the US Dollar is in for a continued period of fairly strong performance for now. According to Chris Turner, Global Head of Markets at ING:
‘We are still holding on to a bearish Dollar scenario for later in the year, but we probably need to see bond markets settle down and Europe start to play its part in the global recovery before the Dollar starts to soften again,’
Of course, any surprising developments in the UK and US coronavirus situation will remain influential for the Pound US Dollar (GBP/USD) exchange rate as well.