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Pound US Dollar Exchange Rate Steadies on Decent UK Outlook after Slump to Monthly Worst

Pound US Dollar Exchange Rate Has Had a Bearish Week So Far 

A strong week for the US Dollar (USD) has seen the Pound US Dollar (GBP/USD) exchange rate plunge to its worst levels in a month. Even as Sterling (GBP) steadies today, it lacks the drive to mount a recovery as it awaits tomorrow’s UK retail sales. 

The US Dollar has been gathering steam as the Pound runs out of steam. GBP/USD tumbled from 1.3921 to 1.3870 last week, and has seen even sharper losses this week so far. 

This morning, GBP/USD touched on a low of 1.3673 – the worst level for the pair in a month and a half since the beginning of February. At the time of writing, GBP/USD was trending a little higher in the region of 1.3673. 

Tomorrow’s UK retail sales results could influence the Pound outlook if it surprises investors. 

Pound (GBP) Exchange Rates Struggle to Recover as CBI’s UK Retail Data Falls Short 

The Pound has been generally unappealing this week. 

Investors sold the Pound on concerns over UK-EU trade tensions and possible obstacles in coronavirus vaccine imports. Weaker than expected UK inflation data also doused speculation of a more hawkish Bank of England (BoE) any time soon. 

While Sterling’s movement has calmed today, a weaker than expected UK retail report from the Confederation of British Industry (CBI) weighed on and limited the currency’s appeal. 

US Dollar (USD) Exchange Rates Continues to Benefit as Markets Lose Appetite for Risk 

A fresh round of global coronavirus uncertainties have been creeping up recently, and are finally having an impact on currency movement this week. 

As the US Dollar is a safe haven currency appealing in times of market uncertainty, it has benefitted from this movement.  

Rising speculations that the US economy will recover from the pandemic more quickly than Europe are also boosting USD against other major currencies. 

Peter Kenny from Kenny’s Commentary LLC and Strategic Board Solutions LLC noted that the market’s current concerns didn’t lend themselves to risk-sentiment: 

‘Rising interest rates, uncertainty of tax policy, concern over inflation all remain top-of-mind for investors. However, none of these themes speak to rising appetite for risk,’ 

Pound US Dollar (GBP/USD) Exchange Rate Awaits UK Retail Sales and US PCE Stats 

The Pound to US Dollar exchange rate could see a late-week shift in movement tomorrow, depending on the results of upcoming key UK and US data. 

UK retail sales results from February will be one of the week’s most influential stats for Pound investors. If UK retail sales disappoints investors, the Pound outlook could dampen as hopes for UK economic resilience could be dampened slightly. 

On the other hand though, if upcoming UK data impresses and tomorrow’s US PCE inflation data is weak, it could make it easier for the Pound to US Dollar exchange rate to record some recovery. 

The US PCE inflation rate is the Federal Reserve’s preferred measure of inflation. If the PCE report falls well short of expectations, investors will be even more doubtful about a more hawkish Fed any time soon.  

This could lead to fresh US Dollar weakness. Essentially, any surprises in data or coronavirus developments could cause some late-week shifts in Pound US Dollar (GBP/USD) exchange rate movement.