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Pound US Dollar Exchange Rate News: GBP/USD Strikes Fresh Two-Month Low amid Bearish Market

April 25, 2019 - Written by John Cameron

US Dollar (USD) Exchange Rates Climb as Markets Remain Cautious

The US Dollar (USD) accelerated against the Pound (GBP) on Thursday as renewed demand for the US currency sees it running roughshod over the majority of its peers.

This extends the gains enjoyed by the US Dollar throughout this week’s session, with investors flocking to the ‘Greenback’ not out of any perceived improvement in the outlook for the US economy by rather as a consequence of other markets becoming less attractive.

Karl Schamotta, director of foreign exchange strategy at Cambridge Global Payments explains:

‘The US Dollar is winning the reverse beauty contest, it’s not necessarily that fundamentals of the US are improving dramatically or anything like that, but in relative terms US markets are looking like attractive places to park capital.’

This appears to be in part driven by global central banks indicating that ultra-loose monetary will be the norm this year, with the Bank of Japan (BoJ) being the latest bank to throw its hat into the ring as it confirmed it would keep interest rates on hold until at least 2020.

While the Federal Reserve also adopted a more dovish tone this year, side-lining plans to continue raising interest rates, having implemented four hikes in 2018, it makes the US Dollar a far more attractive prospect to investors.

David Madden, an analyst at CMC Markets said:

‘The Fed isn’t keen to hike rates, but they are the strongest of the bunch so money will gravitate towards the US Dollar.’

Uptick in UK Retail Activity Offers Modest Support for the Pound (GBP)

Meanwhile, helping to limit the Pound’s (GBP) losses on Thursday morning was the publication of the Confederation of British Industry’s (CBI) latest retail index.

According the CBI, UK retail activity picked up in April, with sales growth improving for the first time since November thanks to sustained wage rises and Easter demand.

‘The survey of 110 firms, of which 55 were retailers, showed that sales volumes rose for the first time in five months, likely supported by the later timing of Easter this year.’

‘Indeed, sales remained above average for the time of year. Orders placed on suppliers also grew and are expected to pick up further in the month ahead, with sales volumes also set to see somewhat faster growth.’

GBP/USD Exchange Rate Forecast: Rebound in US Goods Orders to Turbo Charge the US Dollar?

Looking ahead, the Pound US Dollar (GBP/USD) exchange rate may continue to trend lower on Thursday afternoon, with the release of the latest US durable goods order figures.

Economists forecast that goods orders will have rebounded last month, with order growth forecast to jump from -1.6% to 0.8% and helping to dispel concerns that the US could face a recession later in the year.

However, potentially capping any upside in the US Dollar at the very tail end of the week will be the publication of the US first quarter GDP figures, with analysts forecasting that growth will have slowed slightly at the start of 2019.

Meanwhile, barring any major Brexit developments, the focus for GBP investors at the end of this week is likely to be on the release of the UK’s latest mortgage figures, with the Pound likely to continue to trend lower if mortgages approvals fell in March as forecast.

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