US Dollar Pound (USD/GBP) Exchange Rate Muted as US GDP Accelerates at the Start of the Year
The US Dollar Pound Sterling (USD/GBP) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of £0.7884.
The US government confirmed that US economic growth accelerated in the first three months of 2019.
Annualised GDP rose increased by 3.1%, and remained unchanged from last month’s estimate.
However, growth in consumer spending was revised lower while business investment in intellectual property producers strengthened.
Excluding government spending, inventories and trade, the US economy only grew at a rate of 1.3%,
‘Greenback’ sentiment was dampened as this was the slowest rise since the second quarter of 2013.
US Dollar (USD) Flat as China Demands US Remove Huawei Sanctions
Meanwhile, China’s Commerce Ministry stated that the United States should remove sanctions on Chinese telecoms giant, Huawei immediately.
Spokesman Gao Feng stated that Beijing opposes US abuse of export controls and urged Washington to co-operate ahead of Saturday’s Trump-Xi meeting.
Earlier this morning, the South China Morning Post reported that the US and China were coming to an agreement that would mean a further $300 billion worth of tariffs on Chinese imports would be avoided.
Saturday’s meeting between US President Donald Trump and Chinese leader Xi Jinping is conditional upon the US agreeing to such an agreement.
However, this could do little to buoy the US Dollar.
Sterling (GBP) Muted as SMMT Warns against ‘Seismic’ No-Deal Brexit
The Pound was left flat on Thursday as data revealed that car production slumped by 15.5% in May as there was a falling demand both at home and abroad.
This was the 12th successive month that UK car output declined, and so far in 2019 output has slumped by 21%.
Meanwhile, on Wednesday the Society of Motor Manufacturers and Traders (SMMT) warned that the sector would be crippled by a ‘seismic’ no-deal Brexit.
Commenting on Thursday s data, Mike Hawes, SMMT Chief Executive said:
‘12 consecutive months of decline for UK car manufacturing is a serious concern and underlines yet again the importance of securing a Brexit deal quickly.’
US Dollar (USD) Flat as Trump Directs Fire at Fed Chair Powell
Meanwhile on Wednesday, US President Donald Trump responded after Federal Reserve Chair, Jerome Powell asserted his independence from the White House.
Responding to this, the President stated:
‘Here’s a guy, nobody ever heard of him before, and now I made him and he wants to show how tough he is? OK. Let him show how tough he is. He’s not doing a good job’
President Trump, who has pinned his re-election hopes on economic growth directed his fire at Powell, whom he accuses of not doing enough to bolster the US economy.
As Powell emphasised the central bank’s independence from the White House, in response to Trump’s continued attacks, he stated:
‘We are a strictly nonpolitical agency. We’re human, we’ll make mistakes, but we won’t make mistakes of integrity or character.’
US Dollar Pound Outlook: Will Q1 UK GDP Buoy GBP?
Looking ahead to Friday, the Pound (GBP) could rise against the US Dollar (USD) following the release of the UK’s Q1 GDP.
If GDP rises higher than forecast during the first three months of the year, Sterling could receive an upswing of support.
Meanwhile, US Dollar sentiment could be left dampened following the release of the Chicago Purchasing Managers’ Index (PMI).
If June’s PMI falls further than forecast, the US Dollar Pound (USD/GBP) exchange rate could slump.