GBP/USD Flat after Trump Calls USD Overvalued

Modified: Thursday, 13 April 2017 12:35 BST - Written by Toni Johnson

STORY LINK GBP/USD Flat after Trump Calls USD Overvalued

The Pound Sterling to US Dollar exchange rate is stuck around opening levels of 1.2541 today, as weak UK housing market data clashes with market aversion to USD.

GBP Holds Firm despite Housing Market Data Weakness

The latest house price balance from the Royal Institution of Chartered Surveyors (RICS) may have held steady at 22%, but there are signs that the UK’s housing market is softening.

In a sign of falling impetus within the market, the number of properties for sale on the average estate agent’s books has hit a record low of 43.

The report also notes that the level of enquiries from new home buyers has remained stagnant for the third month in a row, prompting surveyors to cut their forecasts for sales growth.

The net balance of surveyors expecting to see sales increasing has weakened to 12% - down from 16% in the February report.

According to RICS Chief Economist Simon Rubinsohn, ‘The latest results for the RICS survey show little change in the underlying picture surrounding both sales and markets.’

This, combined with a lack of any other UK data, has kept the Pound soft today.

USD Softens after Trump Claims it is Overvalued

Markets had been eagerly awaiting yesterday’s broadcast of an interview conducted by Fox Business News with President Donald Trump.

Traders had hoped the President would give more details on his fiscal stimulus plans, but were left with bigger things to focus on after he claimed the US Dollar was overvalued.

Trump said; ‘I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting -- that will hurt ultimately.’

‘Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good. It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.’

He also commented that he was in favour of interest rates remaining low, threatening to send the US Dollar tumbling.

Investors have been rushing into USD on the belief interest rates will rise quickly this year and Trump will give the economy a shot in the arm; in the space of a few days both of those now seem highly unlikely, potentially removing the floor from underneath the Dollar.

This has softened the US Dollar, but a lack of anything to particularly support the Pound has kept GBP/USD from making advances.

Will Data Help Patch Up Battered Appetite for USD?

There is no UK data left for release today, which means the Pound Sterling to US Dollar exchange rate is likely to remain at the mercy of market sentiment.

US confidence and jobless claims data released this afternoon could help support the US Dollar higher, although as forecasts are for the University of Michigan confidence index for April to weaken slightly, the Pound to Dollar pairing could remain flat going into the bank holiday weekend.

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TAGS: Pound Dollar Forecasts