GBP/USD Exchange Rate Sours on Sliding UK Economic Uncertainty
The Pound US Dollar (GBP/USD) exchange rate is softening this morning as domestic headwinds exerted downward pressures on the UK.
At time of writing the GBP/USD exchange rate is around $1.2004, a 0.27% fall from this morning’s opening levels.
Pound (GBP) Under Pressure from Domestic Woes
Meanwhile, the Pound (GBP) is quiet this morning amid a thin trading calendar. Amidst numerous domestic headwinds returning to the fray, Sterling could find it difficult to shake off these woes.
The ‘Windsor Framework’ continues to pile pressure on political volatility. Optimism over the post-Brexit trade deal waned by the end of last week, and concerns with in-fighting within the Conservative party weighed heavy.
Meanwhile, Wael Sawan, CEO of Shell, has warned of the unattractive nature of the UK market. Blaming windfall taxes, economic uncertainty, and planning delays, Sawan has said that the US is far more attractive for investment. With Brexit issues, and ongoing uncertainty with the UK, GBP investors could be concerned, sapping demand.
Looking ahead, the Pound could tick higher if an expected improvement in the retail sector comes to fruition. The British Retail Consortium (BRC) will release the latest retail sales data for February tomorrow. A predicted 4.8% YoY increase could buoy the Pound, marking the seventh consecutive improvement in the retail sector.
US Dollar (USD) Quiet Ahead of Factory Orders
The US Dollar (USD) is remaining fairly resilient this morning, despite a shift in risk sentiment at the end of last week. Opening the European session, risk mood soured on China’s modest GDP growth target for the year, boosting the ‘Greenback’.
Market expectations had pencilled in a higher figure than the new target of 5% from China. As one of the lowest figures in decades, investors are concerned that the world’s second largest economy could limit their stimulus measures.
Looking ahead, the ‘Greenback’ could slide if factory orders print to forecast. Following a 1.8% strong showing last month, market predictions of a 1.8% reversal could sour the US Dollar. Looking further afield, the latest labour market report on Friday could keep interest rate expectations elevated, buoying the ‘Greenback’.