GBP to USD Exchange Rate Trending Narrowly Today on 'Brexit' Uncertainty

Modified: Wednesday, 8 June 2016 16:53 BST - Written by James Fuller

STORY LINK GBP to USD Exchange Rate Trending Narrowly Today on 'Brexit' Uncertainty

The Pound has been a soft contender against peers today, potentially on account of the rush to register to vote in the Referendum crashing the Government's site.

GBP-USD within Opening Levels on ‘Brexit’ and Global Growth Worries

Pound Sterling was unable to make significant gains against the US Dollar on Wednesday, despite strong ecostats regarding industrial manufacturing.

‘Brexit’ concerns continued to weigh on GBP/USD, with the latest polls having seriously undermined investor confidence in the likelihood of a victory for the ‘Remain’ camp.

The US Dollar was weak overall, however, due to concerns over global growth thanks to the latest World Bank forecasts and disappointing Chinese trade statistics.

EU Referendum Dominates Pound Sterling Exchange Rates despite Strong Industry Performance

UK industry put on a strong performance in April, greatly bettering forecasts of either stagnation or a continued decline.

Manufacturing production was expected to remain flat on the month in April, after 0.1% growth in March, but instead accelerated 2.3%. Year-on-Year (YoY) production declined -1.9% in March and was expected to drop by -1.5% in April, but instead grew 0.8%.


Industrial production increased 2% in April after 0.3% growth in March, beating forecasts of stagnation, while the sector expanded 1.6% YoY after a previous contraction of -0.2%.

Economists were not overly impressed with the figures, however, with Capital Economics economist Paul Hollingsworth explaining that ‘despite the upbeat tone of the ... figures, it is far too soon to proclaim that the sector is out of the woods, or shrugging off Brexit uncertainty.’

Dominic Bryant, economist at BNP Paribas, stated that ‘our central expectation is that April's spike corrects in May with a sharp fall, which would still mean that for Q2 as a whole, manufacturing production growth is slightly negative.’

Pound Sterling barely reacted to the positive figures, however, as ‘Brexit’ concerns continued to weigh on the UK asset with just two weeks to go until polling day.

World Bank Downgrades US and Global Economic Forecasts, US Dollar Weakens

The World Bank has once again downgraded forecasts for GDP growth in the US and across the globe, creating a further headache for the US Federal Reserve as the next monetary policy meeting approaches.

The Bank believes growth in the US economy during 2016 will be -0.5% lower than in 2015 at 1.9%, while global expansion will remain flat at 2.4% after a cut to the previous forecast of 2.9%.

Also softening the US Dollar were Chinese trade figures, which showed a significantly lower-than-forecast improvement in the trade balance and a slightly higher-than-predicted decline in exports.

GBP/USD Exchange Rate Forecast: Will UK GDP Estimate Distract from ‘Brexit’ Worries?

The latest NIESR GDP estimate is due out later today and could move GBP depending upon whether the result shows a predicted acceleration or deceleration in UK economic activity.

Referendum fears could eclipse the result, however.

Meanwhile, US data is likely to have little impact upon the US Dollar, so market sentiment could continue to prove the sole driver of USD movement.

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TAGS: American Dollar Forecasts Pound Dollar Forecasts Pound Sterling Forecasts