GBP to USD Forecast: Pound Regains Balance After Downbeat Carney Comments

US Economy to Crash by 33.5% in Q2, Says Credit Suisse

Brexit Bill Passes Through House of Commons

The pound to US dollar rate managed to hold relatively steady on Friday after a downbeat speech from Mark Carney had caused it to tumble back below the 1.31 level the previous day. The governor of the Bank of England hinted that an interest rate could be required to shore up the UK economy. His comments added to the pressure the pound was already feeling about the prospect of a no-deal Brexit.

The pound received some welcome news on Thursday, when the Withdrawal Agreement Bill passed through the House of Commons with a majority of 330 to 231, following three days of close scrutiny. Next stop is the House of Lords, where it will undergo further inspection. The UK is on track to leave the EU at the end of the month, and while the Brexit bill is sure to be given a more challenging hearing by peers, they aren’t expected to block its path.

US Jobs Market Fails to Meet Expectations

The GBP vs USD rate was lent further support on Friday, when it was revealed that the US jobs market ended 2019 on a sour note. December’s Nonfarm payrolls missed expectations, increasing by just 145,000 – economists had forecast job growth of 160,000 – and the unemployment rate held steady at 3.5% – a five-decade low.

The slow payroll growth wasn’t the only data giving the US dollar a headache as the week ended: average hourly earnings in December rose by just 2.9% – well below the 3.1% projection. Last month’s underwhelming reading marked the first-time wage gains dipped below 3% on a year-over-year basis since July 2018.

However, developments in the Middle East meant the dollar only experienced limited losses. Tensions between Iran and the US appeared to cool, easing concerns that the US economy might suffer from a potential conflict.

Looking Ahead

This morning sees the publication of UK trade, production and economic growth (GDP) results. These are followed by the influential Consumer Price Index – a key indicator to measure inflation – on Wednesday and retail stats on Friday.

The US is set for its own inflation data from December on Tuesday – which will influence the Fed’s thinking on interest rates – followed by the Producer Price Index on Wednesday, retail sales stats on Thursday and production figures on Friday.

After nearly two years of political sparing, Donald Trump is set to sign a phase one trade deal with China on Wednesday. If Mr Trump and Chinese Vice Premier Liu He finally put pen to paper on the deal, the dollar is likely to profit.

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