The USD had another solid week against GBP, and continues to trade within striking distance of its recent two-year high.
|Currency Pair||% Change (Month)||Difference on £200,000|
The pound has seen its value decline in recent weeks again, as uncertainty over Brexit and a rock-solid US economy, continue to support the greenback around its current levels.
GBP did find some support below 1.25 at the interbank rate but has never really threatened to make a sustainable recovery, since its dip in value last month. Despite remaining relatively rangebound, as shown in the currency table above, GBP sellers saw a retraction of almost three cents from its mid-market 30-day high rate of 1.2739.
Investors focus on the US Fed’s interest rate decision later this month may bring some respite for sterling in the short-term, if as anticipated, the FED cut their base rate by 0.25%. With the markets potentially pricing in the potential cut, there are no guarantees that the pound will make any significant gains.
Recent history suggests that sterling’s recent struggles may continue, with investors continuing to shy away from the pound amid the UK’s economic future clouded in uncertainty. The global markets are also showing further signs of a slowdown, as trade wars between the US & China continue to sap the markets confidence.
Whilst the US economy may not be immune to President Trumps on-going trade war with China, the USD continues to show a remarkable resilience to these concerning global economic events, perhaps due to its historical status as a refuge for investors, during times of global market uncertainty.
With the pound showing no signs of reversing its recent negative trend against the USD, investors will be looking towards some political stability and any subsequent breakthrough in Brexit talks, as potential market triggers for GBP/USD exchange rates.
Looking ahead to this week and US Retail Sales figures released tomorrow are expected to show a fall from last month, down from 0.5% to 0.3%. Also, on Tuesday the latest set of Import/Export data is released and again, the expectation is for a fall from last month’s figure, down to -0.5% and -0.4% respectively.
With industrial Production also predicted to fall to 0.2% is the USD in for a tough start to the week?
With Employment data on Thursday expected to remain strong, any potential blip may not be around for long.
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