GBP/USD Forecast – US Economy Helping to Drive the US Dollar’s Value

GBP to USD forecast GDP figures to provide short-term focus for the Pound

GBP/USD rates have fallen back below 1.32 during Thursday’s trading, with the Pound hitting a low of 1.3123 this afternoon.

This move came despite some poor US data, with an increase in Initial Jobless Claims and Trade Balance figures coming out worse than the markets predicted results.

Today’s data is not in line with recent releases, with the US economy continuing to show impressive signs of growth of late. There is an expectation that the Gross Domestic Product (GDP) for Q2 will hit 4%, impressive figures to say the least.

Whilst many of the headlines continue to surround Trump, who as we all know is never far from controversy, it’s the recent trade tariffs he has levied on both China & the EU that seem to be drawing most of the negative attention at present. Whilst these tariffs have been scorned by many global leaders, due to the negative effect they have had on global trade, they seem to have had little effect on US economy up until now.

This does not mean that the US economy is immune to any downturn in global trade but for the time being investors’ global risk appetite remains low, which is actually causing the USD to strengthen. At times of global uncertainty, investors will move their funds away from the riskier currencies and into the USD, which has historically always been considered a safe haven refuge.

Despite the USD’s current buoyancy, due to an expanding economy and impressive growth, it has yet to make any significant move under 1.30 against the Pound. This is despite the deep-rooted concerns regarding the UK and its upcoming separation from the EU.

It has tested this level twice in the past month but Sterling continues to find plenty of support around this key threshold. If there is the worst case scenario and no Brexit deal is reached, an outcome I still believe is highly unlikely, then we could see GBP/USD rates fall below 1.30. However, if this does not occur and UK Prime Minister Theresa May starts to spin talks with the EU in a more positive light, then the current 9 month highs for selling the greenback, could quickly disappear.

If you’d like further insight into the upcoming factors with the potential to impact USD rates, please feel free to get in touch by calling in on 01494 725 353 or by emailing me at mtv@currencies.co.uk.