GBP/USD Exchange Rate Improves, UK Growth Upwardly Revised in Third-Quarter
The Pound US Dollar (GBP/USD) exchange rate edged higher today, with the pairing currently trading around $1.302 after the UK’s growth figure for the third-quarter was upwardly revised to 0.4%, doubly confirming Britain’s avoidance of a Brexit-related recession this year.
Andrew Wishart, an Economist at Capital Economics was downbeat in his analysis, however, saying:
‘The festive cheer will probably be short-lived seeing as [the upgrade] was driven by a larger boost to net trade than in the previous figures which we know has already started to unwind. The underlying picture is still that there is very little momentum in the economy.’
The GBP/USD exchange rate remained flat, however, with UK markets focusing on Brexit developments today as Parliament is due to vote on Prime Minister Boris Johnson’s newly-amended Brexit Withdrawal Agreement Bill.
However, with Boris Johnson having recently ruled out a Brexit transition period beyond late-2020, UK markets have reacted unfavourably to what they perceive as creating an unnecessary ‘cliff-edge’ situation in which Britain could face a no-deal with the European Union.
As a result, we could see the Pound ease once the bill officially passes through later on today, as this would increase Brexit uncertainty going into the New Year.
USD/GBP Exchange Rate Steady, US Markets Await Growth Figure for Third-Quarter
The US Dollar (USD) was left unmoved against the Pound (GBP) today as US markets await the publication of the growth figures for the third-quarter, which are expected to hold steady at 2.1%.
Scott Wren, the Senior Global Equity Strategist at Wells Fargo Investment Institute, commented:
‘If the market’s going to trade higher, it’s going to be these cyclical sectors that are leading the charge. Semiconductors are the spearhead of cyclical stocks. They’re doing better, which once again tells us that there’s this positive backdrop from an economic standpoint.’
Meanwhile, US-China trade developments will remain in focus today, with any signs of Washington and Beijing coming closer to securing a ‘phase one’ trade deal potentially boosting US market optimism.
However, with the ongoing technology dispute between the two superpowers, we could see US Dollar weaken on heightened concerns over a deadlocked global economy denting the American economy.
Shaun Roache, Chief Economist at APAC, commented:
‘I think we may see some moves by the U.S. towards non-tariff measures next year, particularly in the technology sector and that’s going to create more uncertainty, more concern again as we go through 2020.’
GBP/USD Outlook: Could Improving US Goods Orders Boost the ‘Greenback’?
US Dollar investors will be looking ahead to Monday’s publication of the US Durable Goods Orders figure for November, with any signs of improvement boosting the USD/GBP exchange rate.
US-China trade developments will also remain in focus next week, with any signs of a trade deal emerging likely providing some uplift for the ‘Greenback’.
Meanwhile, Brexit developments will continue to drive the GBP/USD exchange rate next week, with any signs of a possible no-deal situation emerging late next year weakening the Pound.