Pound US dollar exchange rate picks up as markets express doubts over US GDP
Philip McHugh July 30th 2018 - 2 minute read
The pound remained fairly stable against its peers on Friday, only really gaining against the US dollar as markets reacted to the latest US GDP figures.
Sterling starts today on a strong footing, with GBP/EUR rising to €1.1251 and GBP/CAD ticking up to C$1.7137, while GBP/USD is trading at $1.3116 and GBP/AUD and GBP/NZD are both holding steady at AU$1.7727 and NZ$1.9275 respectively.
Looking ahead the euro may start the week in a position of strength as economists forecast Germany will print some robust inflation figures later today.
What’s been happening?
Trade in the pound remained fairly muted on Friday, with the currency registering no notable gains against the rest of its peers as markets expressed concerns about the state of Brexit negotiations.
This came in the wake of the EU’s chief Brexit negotiator, Michel Barnier, ruling out the possibility of the UK collecting customs duties on the behalf of the EU.
As this was a major part of Theresa May’s plan for forming a post-Brexit trade deal, it was seen as a considerable setback in negotiations, leading to the pound failing to gain any more ground at the end of last week.
Any meaningful dip in the GBP/EUR exchange rate failed to materialise on Friday however, as EUR investors were preoccupied by the release of the latest French GDP figures.
These revealed that Europe’s second largest economy only expanded by 0.2% in the second quarter, falling short of expectations of 0.3% growth and prompting the euro to remain subdued at the end of the week.
Meanwhile, after initially trending lower throughout the first half of the session, the GBP/USD exchange rate rallied on Friday afternoon following the release of America’s own GDP figures.
While the US GDP figures revealed the economy grew a whopping 4.1% in the second quarter, this failed to provide any lift for the US dollar as economists expressed doubts that such high levels of growth could be sustainable.
What’s coming up?
The start of this week’s session could see the pound tick higher as the release of the BoE’s latest mortgage data occurs, with an expected uptick in approvals for home loans in June likely bolstering GBP exchange rates.
However any potential gains in Sterling are likely to be dwarfed by those seen in the euro this afternoon if Germany posts another strong inflation reading, as expected.
Meanwhile the US dollar could strengthen this afternoon, with economists forecasting US pending homes sales will have rebounded in June.