Pound US Dollar Exchange Rate Surges despite Lack of Fresh Pound Support
Despite weaker demand for the Pound (GBP) in recent weeks, the Pound US Dollar (GBP/USD) exchange rate has capitalised on US Dollar (USD) losses. The US Dollar continues to be sold across the board.
Last week saw GBP/USD rebounding from around its worst levels in a month. GBP/USD surged from 1.3706 to 1.3836 throughout the week, a gain of over a cent.
Since markets opened this week, GBP/USD has already begun a new surging rebound. Today alone, GBP/USD is trending over a cent higher again.
At the time of writing on Monday afternoon, GBP/USD is trending in the region of 1.3945. This is the best GBP/USD level in over a month, and Sterling could hold its ground due to its strong outlook.
Pound (GBP) Exchange Rate Outlook Strong despite Uncertainty over Return to Office
Amid expectations that Britain’s economy will continue to recover from the coronavirus pandemic in the coming months, the Pound outlook remains broadly optimistic.
According to Neil Jones, Head of FX Sales at Mizuho Bank:
‘Current domestic COVID data is encouraging and a further easing of lockdowns will all point in the direction of the UK economy early out of the block on economic recovery expectations,’
Investors continue to find the Pound appealing for the time due to this broad optimism. It also benefits from high market sentiment more than the US Dollar.
US Dollar (USD) Exchange Rates Continues to Lose its Appeal
The US Dollar’s March rebound attempt appears to be a thing of the past now, as investors continue to sell the US currency.
As a safe haven currency, a combination of low US inflation expectations and higher global recovery hopes are keeping the US Dollar broadly unappealing.
According to Valentin Marinov, Head of G10 FX Research at Credit Agricole:
‘This is almost the exact opposite of the moves we saw in March and, given that the US fundamentals have improved sharply since March, the UST yield drop could reflect the negative impact of the huge cash injection from the unwinding of the TGA that started last month.’
This is making it even easier for the Pound to capitalise on US Dollar losses.
Pound US Dollar (GBP/USD) Exchange Rate Awaits Slews of UK Data
This week’s US economic calendar is a little quiet. As the global economic recovery outlook continues to improve, this could leave the US Dollar weak in the coming sessions.
With the US Dollar likely to remain weak, the Pound to US Dollar exchange rate is likely to be influenced more by upcoming UK data. There are slews of influential UK ecostats due in the coming sessions.
Britain’s February job market report will be published tomorrow. It will be followed on Wednesday by inflation rate results. Strong job and inflation stats could even influence Bank of England (BoE) speculation.
Then, towards the end of the week UK retail and PMI results will be published. These could cause a big shift in the Pound’s appeal if they surprise investors.
Of course, continued developments in UK and US coronavirus situations will remain a focus for the Pound US Dollar (GBP/USD) exchange rate as well.