Pound to US Dollar Exchange Rate Rebound Slows but USD Weak as Well
The Pound Sterling to US Dollar (GBP/USD) exchange rate has been able to rebound from lows this week. However, both the Pound (GBP) and US Dollar (USD) are being pressured by domestic political and economic uncertainties, keeping movement mixed.
GBP/USD opened this week at the level of 1.2797 and has been edging higher since. At the time of writing, GBP/USD is trending near the level of 1.2976.
However, the pair’s outlook has not notably improved. Sterling’s rebound has been on the back of hopes that a Brexit deal can still be made, but these hopes could still evaporate.
GBP/AUD has only recovered a little of last week’s major losses, which saw it plummet from the level of 1.3278.
Next week will be a quieter one for economic data. It will leave the Pound to US Dollar exchange rate outlook more influenced by potential Brexit and coronavirus developments.
Pound (GBP) Exchange Rates Pressured as UK Retail Sales Fail to Soften Economic Concerns
The Pound (GBP) has been gaining this week, on hopes that a UK-EU Brexit deal is still possible.
This has been due to optimistic comments from EU officials. The possibility of a no-deal Brexit is still perceived as high though, so Sterling’s outlook has not actually improved notably this week.
Markets are anxious that the coronavirus pandemic will continue to have a big negative impact on UK consumer activity, and the latest retail sales data did little to offset those concerns.
UK retail sales beat expectations in the monthly print but fell short year-on-year.
Most notably though, analysts had gloomy outlooks for Britain’s winter season, especially if coronavirus-related restrictions continue to persist.
US Dollar (USD) Exchange Rates Struggle amid Gloomy US Economic Outlook
In the latest signs that the US Dollar recovery rebound was short lived, the US currency has been under pressure in recent sessions.
Investors have been more hesitant to buy the US currency, as the latest US data showed US jobless claims falling by less than expected.
According to Ron Simpson, Managing Director of Global Currency Analysis at Action Economics:
‘The economic outlook is so uncertain — we’ll have news or events that would say there is a vaccine in October and next that there would be a vaccine at the end of 2021,’
Concerns over the US job market and how the coronavirus pandemic is hurting the US economy are keeping the US Dollar weak.
Pound to US Dollar (GBP/USD) Exchange Rate Outlook Depends on Brexit and Coronavirus
Investors are likely to remain hesitant to buy the Pound or US Dollar in the coming sessions, with major uncertainties weighing on the outlooks of both currencies.
Instead, markets will be awaiting potentially big developments in political and global factors.
For the Pound, the past week’s rise in Brexit deal hopes may be temporary. If UK-EU Brexit relations worsen ahead of next month’s negotiations deadline, the Pound could be in for deeper losses.
On the other hand, any optimism in Brexit going help the Pound to sustain a stronger recovery.
Of course, the coronavirus situation in Britain and the US will remain highly influential as well. If the worsening infections in Britain lead to further lockdown, economic jitters will worsen and the Pound could see more pressure.
As for data, UK and US PMI projections could cause some Pound to US Dollar (GBP/USD) exchange rate movement next week.