Forex Signals – Pound to US Dollar Exchange Struggle
Pound to US Dollar Exchange Rate Highly Volatile on Coronavirus Jitters
Concerns about the coronavirus pandemic have had a big impact on both UK and US economies, and the Pound to US Dollar (GBP/USD) exchange rate outlook remains dominated by this. Key US data due later today could shift the pair’s movement ahead of next week’s session.
This week has been a volatile and mixed one for GBP/USD. After opening this week at the level of 1.3054, GBP/USD has been fluctuating within a fairly narrow range.
GBP/USD has jumped between lows of 1.3007 and highs of 1.3123 this week. This high was not too far below last week’s high of 1.3176 though, which was the best level for GBP/USD in half a year.
Ultimately, GBP/USD has been able to sustain its impressive July gains. GBP/USD currently trends just above the week’s opening levels but has been unable to sustain further gains.
Pound (GBP) Exchange Rates Limited by Coronavirus Jitters
This week’s UK ecostats have largely beaten expectations. UK job market data and growth rate results both beat forecasts.
On top of this, recent comments from EU officials have boosted hopes that a UK-EU Brexit deal can still be made before the end of the transition period.
However, as ‘second wave’ coronavirus fears worsen across the globe, there are concerns over how the government could react. Speculation has risen that if Britain’s coronavirus situation does not improve, the nation could see continued lockdown.
Britain’s quarantine rules for abroad flights have been shifting as well, which has been met with concern from analysts. According to Russ Mould, Investment Director at AJ Bell:
‘And yet until there is a vaccine, the recovery from the coronavirus is likely to be patchy with the risk of travel restrictions between countries when there are localised flare ups.’
US Dollar (USD) Exchange Rates Seeing Mixed Movement Ahead of Retail Stats
Investors are also hesitant to buy the US Dollar (USD). The US economy has been hit hard by the coronavirus, with analysts criticising the US government’s handling of the pandemic.
This week’s US data has been generally optimistic, following last week’s stronger than expected US Non-Farm Payroll results. – candlestick trading
However, the US Dollar’s attempts to rebound from lows have been hindered. Hopes for US Congress to reach an agreement over US stimulus have been dampened by continued deadlock and impasse in negotiations.
Pound to US Dollar (GBP/USD) Exchange Rate Awaits US Retail Stats and Brexit Developments
This afternoon will see the publication of this week’s most notable US data.
US retail sales from July will be published during this afternoon’s American session. The report is expected to show that US retail sales saw a major slowdown in activity from June, falling from 7.5% to 1.9%.
However, if the data beats expectations, it could bolster US economic resilience hopes. This could make it easier for a stronger US Dollar to push GBP/USD down by the end of the week – Forex Signals – Pound to US Dollar
On the other hand, the Pound’s own recovery attempts on Brexit hopes would become easier if the US Dollar was hit lower by weak US retail results.
US Michigan confidence data is also due for publication this afternoon. Big surprises in these stats could all cause some movement in the US Dollar outlook.
Looking ahead to next week, UK inflation rate data is due for publication.
However, as August draws on the Pound to US Dollar (GBP/USD) exchange rate is more likely to be influenced by developments in the coronavirus and Brexit situations.