Pound Falls Against US Dollar Despite Improving Risk Sentiment
The pound / dollar exchange rate fell this morning, despite improving risk sentiment after the US and China agreed to balance and promote trade and investment cooperation. The pair is currently trading around $ 1.40.
The US dollar is up against the pound today, despite improving risk sentiment, which is starting to limit the attractiveness of the safe US dollar.
The talks between the world’s two largest economies were reported to have been “frank and pragmatic.”
Bloomberg analysts describe the development of relations between the two countries:
“The two countries are slowly resuming official contacts after the change of administration in the US in January. Some aspects of US policy towards China are becoming clearer, but it is still not publicly clear what the US plans to do with the signed Phase 1 trade agreement. last year or tariffs on Chinese goods. “
US economic news will release the latest US CPI for May this afternoon, which is expected to rise 0.4% month-on-month.
Annual inflation in April rose by 4.2%, the highest rate since 2008.
However, Federal Reserve policymakers said they were comfortable with high inflation and that they expected the situation to be “in transition.”
However, any signs of improved forecasts for the US economy will boost the US dollar.
Pound (GBP) Falls As UK Government Science Advisors Warn of ‘Significant Third Wave’ of COVID-19
The pound (GBP) fell today after the Sage government committee model suggests an increased risk of a “significant third wave” of Covid-19 infections and hospitalizations. This has led many to doubt that the planned relaxation of the quarantine will take place on June 21.
Prime Minister Boris Johnson looked more cautious on Wednesday, saying:
“Everyone can clearly see that the number of cases is increasing and in some cases the number of hospitalizations is increasing. I think we need to assess the extent to which the deployment of the vaccine, which has been phenomenal, has provided sufficient protection to the population so that we can move on to the next phase.
Here’s what we’re going to look at. And there are arguments, one way or another, but they will be based on data. We’ll review it and post it on Monday. “
As a result, sterling investors have become more pessimistic about the outlook for the UK economy, which will face difficulties if the easing of the lock is delayed later this month.
In the afternoon, investors in the pound will await a speech by the chief economist of the Bank of England (BoE) Andrew Haldane.
However, any upbeat comments on the outlook for the UK economy or labor market will help strengthen the pound / US dollar exchange rate.
GBP / USD Exchange Rate Forecast: Could concerns about a delay in easing UK isolation affect the pound sterling this week?
US dollar (USD) traders will be watching tomorrow’s June Michigan Consumer Sentiment data.
Any sign of rising consumer morale in the US will have a positive impact on the US dollar.
However, if risk sentiment continues to improve this week, the USD / GBP exchange rate could fall as investors look for riskier assets.
Pound (GBP) investors will be watching tomorrow’s release of the latest April GDP data, which is expected to rise 2.4%.
However, the pound / US dollar exchange rate could fall further this week if the quarantine easing at the end of this month is likely to be postponed.