GBP/USD Exchange Rate Continues to Fall on Coronavirus Concerns, UK Manufacturing PMI May Trigger Movement
The Pound/US Dollar (GBP/USD) exchange rate has firmly settled on a downwards trajectory this week, with the pairing set to maintain its current tone as Brexit and Coronavirus provide headwinds.
At the time of writing, GBP is trading at $1.3831, virtually unchanged from this morning.
US Dollar (USD) to Rally on Positive Economic Data?
The US Dollar (USD) looks poised to rally on some upbeat data releases in the second half of this week.
The publication of the ISM Manufacturing PMI on Thursday is expected to reveal a slight drop in factory sector activity as a result of supply chain and bottleneck issues, but the index is expected to remain largely robust and may have a negligible impact on USD exchange rates.
Meanwhile, Friday’s payroll figures are expected to show that the US economy added 700,000 jobs in June: an increase on May’s figures. This figure would align with today’s ADP Employment Change release, which saw private businesses in the US hire 692,000 workers this month.
Such figures will lend further support to the ‘Greenback’, hinting at the prospect of swift US economic recovery. Moreover, some strong US employment figures are likely to reinforce speculation that the Federal Reserve could start tightening its monetary policy in the near future.
British Pound (GBP) to Remain Low as UK Struggles Against Delta Covid Variant
With 26.8 coronavirus cases per 100,000 people registered yesterday, any upside in the Pound (GBP) looks limited through the second half of this week
Today’s UK GDP reported a 1.6% contraction in the first quarter, slightly below forecasts for a 1.5% slump and extending some pressure on Sterling today.
This bearish GBP sentiment was exacerbated by fresh Brexit concerns regarding fishing quotas off Northern Ireland. The EU’s allowance of a protocol extension granted some leeway, but doesn’t alleviate the difficulty of finding a solution that everyone is happy with.
The UK final Manufacturing PMI release on Thursday is likely to confirm a slight slowing of factory activity in June with the index expected to dip from 65.6 to 64.2.