USD/GBP Exchange Rate Flat as UK Earnings Figures Rise
The US Dollar Pound (USD/GBP) exchange rate held steady today and is currently trading around £0.7878 on the interbank market.
The Pound (GBP) steadied against the US Dollar (USD) following the release of the US ILO unemployment rate figures for April, which held at 3.8%, buoying some optimism in the economy as this represented a 44-year low.
Tej Parikh, a Chief Economist at the Institute of Directors, commented:
‘The buoyant labour market is still going strong for the UK economy, even as it weathers widespread political uncertainty. However, the employment boom cannot last forever, and is certainly showing signs of softening.’
These were followed by the UK average earnings excluding bonus figures for April, which rose to 3.4% despite the forecast 3.1% decrease.
Today also saw the printing of the UK claimant count change figures for May, however, which showed a bearish outcome at 23.2K, leaving many Sterling traders remaining jittery on UK growth.
The US Dollar, meanwhile, steadied following the publication of the producer price index figures for May, which showed an annual decrease at 2.3%.
USD/GBP Exchange Rate Rangebound as Taiwan ‘Chess Piece’ Exacerbates US-China Trade Tensions
US-China trade tensions are remaining in focus for many ‘Greenback’ traders, however, as Taiwan is increasingly looking like a ‘chess piece’ in trade discussions, souring the relationship between the two superpowers.
Bonnie Glaser, a Senior Advisor at the Washington-based think tank CSIS, commented:
‘I think the Chinese would be worried that there’s always this potential for things to go in a very negative direction because the combination of Trump being president and the possibility that Tsai [Ing-wen, the Taiwan President] gets re-elected … could really embolden Tsai to move toward the direction of independence.’
US markets, however, have benefited as the tariffs on Mexico have been averted, with the Mexican President saying that a new NAFTA trade deal could be signed as early as next week.
President Donald Trump tweeted on Saturday:
‘I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended.’
USD/GBP Outlook: Sterling Could Improve on Brexit Breakthrough News
US Dollar traders will be looking ahead to tomorrow’s printing of the US consumer price index figures for May, which are expected to grow by 0.2%.
Tomorrow will also see the publication of the US monthly budget statement for May, and with any bullish reading this could bolster the USD/GBP exchange rate.
The US Dollar Pound exchange rate will likely be driven by political developments tomorrow, with Brexit and the Tory leadership contest remaining in focus in the UK, while US-China trade tensions are also going to occupy ‘Greenback’ traders’ attention.
Any signs of a breakthrough regarding Brexit could, however, see the Sterling begin to rise against the US Dollar, as UK markets would be relieved over the breaking of the political stalemate.