The Pound US Dollar (GBP/USD) exchange rate held steady today following a drop in US Treasury yields. The pairing is currently fluctuating around $1.38.
Nevertheless, today saw US Treasury yields begin to rise slightly ahead of the Federal Reserve’s latest policy meeting and inflation data due out this week.
GBP/USD Exchange Rate Rangebound Despite Uptick in US Durable Goods Orders
John Velis, macro strategist at BNY Mellon, said:
‘The Fed has managed to convince the market that it is in no position to begin contemplating tapering, never mind raising rates, for — in their own words — ‘some time’.’
In US economic news, today saw the release of March’s durable goods orders, which rose by 0.5%, undercutting forecasts of a 2.5% increase.
The United States Census Bureau commented on the data:
‘New orders for manufactured durable goods in March increased $1.4 billion or 0.5 percent to $256.3 billion, the U.S. Census Bureau announced today. This increase, up ten of the last eleven months, followed a 0.9 percent February decrease. Excluding transportation, new orders increased 1.6 percent. Excluding defense, new orders increased 0.5 percent. Fabricated metal products, up six of the last seven months, led the increase, $1.2 billion or 3.6 percent to $35.4 billion.’
However, with signs of the global Covid-19 situation easing off slightly, demand for the safe-haven ‘Greenback’ is beginning to pick-up.
READ: EUR/USD Next 6-12 Month Forecasts: Top FX Institutional Analysis and Euro-Dollar Predictions
Pound (GBP) Steady Despite Growing Confidence in UK’s Economy
The Pound (GBP) held steady against the US Dollar (USD) today despite growing confidence in the UK’s economic recovery.
Britain’s economy is now forecast to grow at its fastest rate since the second world war in 2021.
Larry Elliott, The Guardian’s economic editor, was more cautious, however, saying:
‘It is, of course, perfectly possible that this boom will be different from the others and that the economy will, in due course, settle down to a period of steady, sustainable growth. That, though, is based on a number of key assumptions. None of which is to say that another recession is inevitable or imminent. The consumer spending spree may well continue. Policy may be perfectly calibrated. The housing market may not be a bubble. Rich countries may ensure vaccines arrive in poor countries that badly need them. It would be wise to enjoy the good times while they last, that’s all.’
In the absence of any UK economic data today, GBP investors are instead monitoring the nation’s Covid-19 situation.
Daily cases of Covid-19 are down by -170 compared to last week, while daily deaths are currently reported to be 11.
As a result, GBP investors are becoming more hopeful about the UK’s economy situation now that non-essential shops, bars and restaurants are allowed to function under recently eased lockdown restrictions.
Pound Dollar Forecast
US Dollar (USD) investors will be looking ahead to tomorrow’s release of April’s US Consumer Confidence report.
Any signs of improvement in US consumer morale could provide a boost for the USD/GBP exchange rate.
Risk-sentiment will also continue to influence the US Dollar exchange rates this week. As a result, any signs of improving risk sentiment could begin to limit the appeal of the safe-haven ‘Greenback’.
The Pound US Dollar (GBP/USD) exchange rate could head higher this week if confidence in the UK’s economy continues to grow.