Pound-Dollar Rises Despite Surging US Services Sector
The Pound US Dollar (GBP/USD) exchange rate rose by 0.2% today, with the pairing currently fluctuating around $1.39.
The US Dollar (USD) failed to rise against Sterling today despite mixed risk sentiment.
A slump in equity markets has driven-up demand for the safe-haven ‘Greenback’, while riding Covid-19 cases in India has also dampened confidence in the global coronavirus situation.
In US economic news, today saw the release of the latest US private payrolls days, which rose by 742 thousand in April.
US services sector activity also surged last month as the world’s largest economy picked up.
Chris Williamson, Chief Business Economist at IHS Markit, commented:
‘Thanks to the cocktail of a successful vaccine roll-out, the reopening of the economy, ultra-accommodative monetary policy and injection of fresh fiscal stimulus, businesses are reporting the strongest surge in demand seen for at least a decade.’
However, this data failed to buoy the USD/GBP exchange rate today, which has struggled because rising confidence in the UK economy.
Pound (GBP) Rises as UK Economic Outlook Continues to Improve
The Pound (GBP) was driven higher against the ‘Greenback’ today as the outlook for the UK economy continues to improve.
UK car sales have rebound this year after ‘one of the darkest years in automotive history’, according to the Society of Motor Manufacturers and Traders (SMMT).
Mike Hawes, the SMMT’s chief executive, said:
‘A full recovery for the sector is still some way off but with showrooms open and consumers able to test drive the latest, cleanest models, the industry can begin to rebuild.’
As a result, the Pound US Dollar exchange rate has continued to benefit from rebounding confidence in the UK economy.
May will also see lockdown restrictions further eased, as Covid-19 infection rates and deaths continue to fall.
In UK Covid-19 news, daily cases are down by -739 compared to last week, while daily deaths have remained in single figures.
Consequently, GBP investors are becoming more hopeful that falling Covid-19 numbers could substantially help the nation’s economic recovery in the months ahead.
Pound US Dollar Exchange Rate Forecast
US Dollar (USD) traders will be eyeing tomorrow’s release of the flash US Nonfarm Productivity figure for the first quarter of 2021.
If this shows any signs of improvement in the world’s largest economy, then the ‘Greenback’ could begin to claw back some of its losses against Sterling.
Pound (GBP) traders will monitor the Bank of England (BoE) tomorrow as it announces its latest interest rate decision.
Although the rate is expected to remain at 0.1%, the BoE could be more upbeat about the UK economy as Covid-19 rates fall and the economy cautiously reopens.
As a result, we could see the Pound to US Dollar exchange rate continue to head higher this week.