British Pound to US Dollar (GBP/USD) Exchange Rate Plummets; UK Consumer Confidence Falls
The Pound (GBP) is presently trading down against the US Dollar (USD) at 1.6870, following a disappointing flop for Sterling. Session highs have seen the Pound attain 1.6893, whilst lows have dipped to 1.6864.
If you're looking to make an international money transfer, we recommend TorFX.
Thursday saw a discouraging day for the Pound which fell to its lowest point in seven weeks against the US Dollar after Consumer Confidence figures fell in July. The data was published at -2, despite being forecast to reach 2, showing that consumers in the UK economy are lacking in optimism.
July has seen the first drop in Consumer Confidence in the latter six months. Expert in the field Nick Moon stated: ‘The almost relentless rise of the last six months couldn’t continue indefinitely, and the government will be hoping this is just a temporary setback rather than the forerunner of a wider decline in confidence.’
The UK awaits the influential Manufacturing Purchasing Managers Index (PMI), which will show the productivity of the manufacturing sector. Although the figure is expected to reach over 50—which will still indicate expansion—the data is expected to fall from June’s 57.5, to only 57.2 in the month of July.
The Pound has stepped into the spotlight in recent months as the Bank of England hinted that interest rate hikes would be materialising in the near future; however, as the US produces more favourable results and the US Dollar’s popularity grows amongst investors, the Pound has fallen down significantly.
Industry expert Valentin Marinov commented: ‘The market has already priced in considerable tightening from the Bank of England over the next 12-24 months whereas the market is only just starting to price in potentially earlier hikes by Fed, which is supporting the Dollar.’
As the UK figures become more prominent amid election campaigning, some political parties such as Labour are using recent data publications to enhance their campaign. Moreover the currency market as a whole is trading amid geopolitical tensions as the US and EU enforce strong sanctions against Russia following the downing of the passenger Malaysian Airlines plane flying from Holland to Malaysia.
Meanwhile in the US, the Federal Open Market Committee (FOMC) decided to continue on its current course with regards to monetary policy.
The Federal Reserve stated: ‘Information received since the Federal Open Market Committee met in June indicates growth in economic activity rebounded in the second quarter. Labour market conditions improved, with the unemployment rate declining further. However, a range of labour market indicators suggests that there remains significant underutilisation of labour resources.’
Thursday saw Initial Jobless Claims figures rise by 302K job-seekers, more than the forecast 300K. Moreover Continuing Claims numbers showed a predicted 2492K figure bypassed, by the actual 2539K.
Conversely the Chicago PMI fell surprisingly in July, in comparison to June’s 62.6 outcome. Economists had forecast 63.0, a gain on June’s figure; however the data contracted showing only 52.6, hovering just over the 50 threshold.
Friday will see another influential day for the GBP to USD exchange rate, by way of UK Manufacturing PMI alongside a wealth of US data including Change in Non-Farm Payrolls to indicate wages, and Personal Consumption Expenditure to suggest the rate of which US consumers are spending.
The US Dollar may gain the ability to rally higher if the figures published prove favourable, however the Pound appears to be set in a lower position than it has for the latter few months. The USD to GBP exchange rate is presently residing at 0.5928 in the currency market.