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Pound Sterling to US Dollar Exchange Rate Falls as US Data Beats out UK Data
Published: 4 May at 3 PM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Economy, Pound Dollar Exchange Rate,
The Pound Sterling to US Dollar exchange rate (GBP/USD) slipped further from its weekly high on Wednesday as another negative PMI print weighed on the Pound and surprisingly positive data released from the US.
<h2>British Economic Worries Continue as Construction PMI Scores Lower</h2>
The Pound has struggled to hold its ground this week with investors no longer able to ignore poor data. GBP/USD currently trends in the region of 1.4475, around -0.5% down despite briefly hitting its highest point of 2016 (1.4766) on Tuesday.
While bets that the UK will leave the European Union in June are still being lifted after recent polls suggested a ‘Brexit’ was unlikely, the caution taken by investors and businesses ahead of the vote had previously been seen as having a negative effect on the UK economy.
PMI data released this week seems to have all but confirmed this concern. The Financial Times reported that not only had UK Manufacturing hit its lowest scores since the Eurozone crisis but that British economic uncertainty was at its worst levels in over 19 years.
‘With measured uncertainty in Britain this spring higher than at the time of the September 11 terrorist attacks, the collapse of Northern Rock, the global financial crisis, the Eurozone crisis and the Scottish independence referendum, Professor Nicholas Bloom said the referendum “appears to be generating an extraordinary level of economic policy uncertainty”.’
Tuesday’s Manufacturing PMI printed a contraction of 49.2, disappointing expectations of a 51.2 score and setting the Pound’s current movement in motion.
Wednesday followed up with disappointing Construction PMI. Expected to soften from 54.2 to 54.0, the sector instead fell to 52.0.
<h2>US Dollar (USD) Buoyed on Wednesday’s Hopeful Data</h2>
Following a series of poor data releases last week and earlier this week, Wednesday’s session served to restore some strength to the weathered US Dollar.
First of all, MBA’s latest mortgage applications report showed a narrowing contraction of -3.4%, a slight improvement over the previous figure of -4.1%. United States’ Trade deficit also narrowed from -47b to -40.40b.
While the ADP employment change figure printed much lower than the expected 196k, at 156k, the only considerably poor score of the day was beaten out by factory orders escaping its -1.9% contraction to print a more promising 1.1%, as well as optimistic PMI and ISM scores.
US Services PMI beat out expectations that it would hold steady at 52.1, instead improving to 52.8. The Composite print, on the other hand, climbed from 51.7 to 52.4.
Last but not least, the highly anticipated Non-Manufacturing ISM report came in at an impressive 55.7, comfortably exceeding the projected increase from 54.5 to 54.7.
<h3>Pound Sterling to US Dollar (GBP/USD) Forecast to Rally Further if Strong US Data Continues</h3>
Currently moving definitively in favour of the ‘Greenback’, GBP/USD could be set to slump from its 2016 high if data continues to release as it has so far this week.
With economists fearing the effects that ‘Brexit’ concerns have had on the British economy, investors and analysts will set their sights on Thursday’s Services and Composite PMI released from the UK.
The pressure is on the UK’s biggest sector to make up for losses in Manufacturing and Construction – if it prints below expectations, Sterling sentiment could plummet.
On the other hand, US data continuing to print as positively as it did on Wednesday would increase the chances of the US Dollar making a definite recovery.
Jobless claims reports are due on Thursday, followed by highly anticipated unemployment and Non-farm payroll reports on Friday.
While UK Composite PMI is currently forecast to slow from 53.6 to 53.2, if it worsens less than expected or improves, Pound sentiment may instead strengthen.
The Pound Sterling to US Dollar (GBP/USD) exchange rate currently trends around 1.4475 while the US Dollar to Pound Sterling (USD/GBP) exchange rate trends in the region of 0.6906.
<h2>British Economic Worries Continue as Construction PMI Scores Lower</h2>
The Pound has struggled to hold its ground this week with investors no longer able to ignore poor data. GBP/USD currently trends in the region of 1.4475, around -0.5% down despite briefly hitting its highest point of 2016 (1.4766) on Tuesday.
While bets that the UK will leave the European Union in June are still being lifted after recent polls suggested a ‘Brexit’ was unlikely, the caution taken by investors and businesses ahead of the vote had previously been seen as having a negative effect on the UK economy.
PMI data released this week seems to have all but confirmed this concern. The Financial Times reported that not only had UK Manufacturing hit its lowest scores since the Eurozone crisis but that British economic uncertainty was at its worst levels in over 19 years.
‘With measured uncertainty in Britain this spring higher than at the time of the September 11 terrorist attacks, the collapse of Northern Rock, the global financial crisis, the Eurozone crisis and the Scottish independence referendum, Professor Nicholas Bloom said the referendum “appears to be generating an extraordinary level of economic policy uncertainty”.’
Tuesday’s Manufacturing PMI printed a contraction of 49.2, disappointing expectations of a 51.2 score and setting the Pound’s current movement in motion.
Wednesday followed up with disappointing Construction PMI. Expected to soften from 54.2 to 54.0, the sector instead fell to 52.0.
<h2>US Dollar (USD) Buoyed on Wednesday’s Hopeful Data</h2>
Following a series of poor data releases last week and earlier this week, Wednesday’s session served to restore some strength to the weathered US Dollar.
First of all, MBA’s latest mortgage applications report showed a narrowing contraction of -3.4%, a slight improvement over the previous figure of -4.1%. United States’ Trade deficit also narrowed from -47b to -40.40b.
While the ADP employment change figure printed much lower than the expected 196k, at 156k, the only considerably poor score of the day was beaten out by factory orders escaping its -1.9% contraction to print a more promising 1.1%, as well as optimistic PMI and ISM scores.
US Services PMI beat out expectations that it would hold steady at 52.1, instead improving to 52.8. The Composite print, on the other hand, climbed from 51.7 to 52.4.
Last but not least, the highly anticipated Non-Manufacturing ISM report came in at an impressive 55.7, comfortably exceeding the projected increase from 54.5 to 54.7.
<h3>Pound Sterling to US Dollar (GBP/USD) Forecast to Rally Further if Strong US Data Continues</h3>
Currently moving definitively in favour of the ‘Greenback’, GBP/USD could be set to slump from its 2016 high if data continues to release as it has so far this week.
With economists fearing the effects that ‘Brexit’ concerns have had on the British economy, investors and analysts will set their sights on Thursday’s Services and Composite PMI released from the UK.
The pressure is on the UK’s biggest sector to make up for losses in Manufacturing and Construction – if it prints below expectations, Sterling sentiment could plummet.
On the other hand, US data continuing to print as positively as it did on Wednesday would increase the chances of the US Dollar making a definite recovery.
Jobless claims reports are due on Thursday, followed by highly anticipated unemployment and Non-farm payroll reports on Friday.
While UK Composite PMI is currently forecast to slow from 53.6 to 53.2, if it worsens less than expected or improves, Pound sentiment may instead strengthen.
The Pound Sterling to US Dollar (GBP/USD) exchange rate currently trends around 1.4475 while the US Dollar to Pound Sterling (USD/GBP) exchange rate trends in the region of 0.6906.
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Source: moneytransfer.co.uk