The pound to US dollar exchange rate has drifted lower, dropping to fresh two-week lows yesterday on the interbank rate. The movement is twofold as a resurgent US dollar, in the face of increasing global economic uncertainty, and a weaker pound caused by a similar environment shifts the GBPUSD rate.
Inflation data was released this morning for the UK falling to 1.5% from 1.7%, a number that is expected to fall lower in the future owing to decline in spending by the UK. Sterling has rebounded from the fresh lows hit yesterday of 1.2256 on the interbank rate, currently trading at 1.2315 on the interbank exchange.
Big news has continued to be the price of oil which has seen large declines in recent days, dropping into negative territory by some measures. This is reflective of a global oversupply of oil, as the world economy has much less demand following the big declines in consumer and business activity.
This has in turn fueled a stronger US dollar, as investors face increasing concerns over the global outlook. The US dollar is a safe haven currency and in times of economic uncertainty can rise in value as it becomes more attractive to hold, as a shield against weakness and uncertainty elsewhere.
What Can We Expect for the Rest of the Week on GBPUSD Exchange Rates?
Today is a slightly quieter day of economic data but there might continue to be fluctuations owing to sentiments relating to the economic outlook over the impact of COVID-19. Some positive news for the market was delivered by news that Spain will begin to ease some restrictions on children under 14 going out, and Italy will review their lockdowns by the 4th May.
In the US, some southern states including South Carolina announced plans to scale back the lockdown restrictions, and in the UK a trial vaccine to coronavirus is being tested. Such news has tempered some of yesterday’s uncertainty and might explain why the US dollar has given up some of the larger gains yesterday.
GBPUSD levels will tomorrow have Jobless Claims data from the US and preliminary UK Services data to contend with, both releases with market moving potential and previous history of moving rates since the Coronavirus pandemic began affecting the global economy.
Friday sees the latest UK Retail Sales, which are predicted to show declines, which might provide further cause for unease on GBPUSD exchange rates.
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