Bounce in UK Retail Sales Supports Pound US Dollar Exchange Rate
A stronger-than-expected bounce in UK retail sales helped to push the Pound to US Dollar (GBP/USD) exchange rate higher this morning.
As sales surged 7.2% on the year in March this offered Pound Sterling (GBP) a boost, as confidence in the health of the sector improved.
Even so, the positive impact of the data was ultimately limited thanks to the fact that retail sales still saw a decrease over the course of the first quarter.
While the reopening of non-essential retail shops poises the sector for a strong recovery in the second quarter the upside potential of GBP exchange rates still proved a little muted.
A solid performance from April’s flash UK manufacturing and services PMIs also helped to support the Pound, though.
Rising US Manufacturing and Services PMIs Forecast to Benefit USD Exchange Rates
However, the US Dollar (USD) could return to a stronger footing this afternoon on the back of the latest US manufacturing and services PMIs.
Forecasts point towards another strong monthly uptick for both indexes, suggesting a greater degree of growth within the world’s largest economy.
USD exchange rates may find particular encouragement in the services PMI, with investors expecting to see the index rise to 61.9 for April.
Evidence of a steady gain in momentum across both the manufacturing and services sectors would increase the odds of the US economy delivering a positive second quarter growth rate.
On the other hand, if the PMIs fail to improve as far as anticipated this may put an increased dampener on the US Dollar.
In the absence of any major swing in market risk appetite the potential for a USD exchange rate rally may prove limited.
Durable Goods Orders Recovery Set to Boost US Dollar
Further gains could be in store for the US Dollar next week, meanwhile, with the release of March’s durable goods orders figure.
After the sharp decline seen in February forecasts suggest a significant rebound in orders on the month, an increase which could dent the GBP/USD exchange rate.
Signs of growing confidence within the US economy are likely to give the US Dollar a leg up against its rivals, even as worries over the Covid-19 crisis linger.
Doubts over the strength of the global economic outlook may also help to boost the US Dollar across the board, with any increase in safe-haven demand set to push the GBP/USD exchange rate lower.