Pound US Dollar Exchange Rate Holding Above Monthly Worst but USD Remains Strong
Broad strength in the US Dollar (USD) has been making it harder for the Pound US Dollar (GBP/USD) exchange rate to keep recovering from near its monthly lows. The US Dollar outlook has risen on US President Joe Biden’s latest infrastructure plans.
Since opening this week at the level of 1.3791, GBP/USD has been trending with a largely downside bias. GBP/USD has been able to hold above last week’s monthly lows of 1.3675, but is struggling to recover.
At the time of writing on Thursday morning, GBP/USD is trending close to the week’s opening levels again.
This afternoon’s US manufacturing PMI and tomorrow’s anticipated US Non-Farm Payroll results could also influence the Pound to US Dollar exchange rate outlook if they surprise investors.
Pound (GBP) Exchange Rates Avoid Losses Thanks to UK Data
The Pound (GBP) has been broadly appealing lately as well. Continued speculation that Britain’s economy will be one of the first major economies to recover from the coronavirus pandemic, and anticipation for easing of UK lockdowns, are keeping the outlook strong.
This has been the primary cause of Pound strength lately, but Sterling has been unable to hold against a surge in demand for the US Dollar.
Still, the Pound is avoiding bigger losses and holding above its worst levels in a month. This is partially thanks to signs of strength in recent UK data.
Today’s UK manufacturing PMI from Markit came in slightly higher than projected.
US Dollar (USD) Exchange Rates Soar as US President Joe Biden Talks Up Infrastructure Plans
Last night, US President Joe Biden held an anticipated speech over his plans to stimulate the US economy. In what he calls the ‘American Jobs Plan’, his government plans $2trillion in infrastructure.
Despite Republican Party opposition to the plan which may hinder its implementation, the news was exciting to markets. It boosted the US recovery outlook and the US Dollar.
It also made investors hesitant to take risks for now, further bolstering the appeal of USD as a safe haven.
Pound US Dollar (GBP/USD) Exchange Rate Awaits Key US Data
This week’s speech from Joe Biden boosted appetite for the US Dollar, but the US currency’s outlook could strengthen even further if upcoming US data continues to show resilience in the US economy.
Later on, markets will react to US manufacturing PMI data from ISM. However this could be overshadowed by anticipation for tomorrow’s anticipated US Non-Farm Payrolls report.
While many major economies will be closed to observe the Good Friday public holiday tomorrow, key US data due in the afternoon could have a late-week impact on exchange rates going into the weekend.
The US NFP report is a key indicator of US economic strength. If the data beats forecasts it could help the US Dollar to extend its recent gains.
On the other hand, unexpectedly poor US Non-Farm Payroll stats could instead surprise markets and offset some of the recent USD strength.
Looking ahead to next week, services and composite PMI results for March, as well as Fed meeting minutes, will be in focus for the Pound US Dollar (GBP/USD) exchange rate outlook.