Pound Sterling US Dollar Exchange Rate Falls as UK Services PMI Disappoints

STORY LINK Pound Sterling US Dollar Exchange Rate Falls as UK Services PMI Disappoints

US Dollar (USD) Rises as Global Markets Become More Cautious

The US Dollar rose today as global markets become increasing cautious over the coronavirus pandemic and the uncertainty over the size of the next Covid-19 stimulus package payment.

Congress have taken the first steps towards approving Joe Biden’s proposed $1.9 trillion stimulus package.

The US Dollar was supported by the publication of January’s ADP Employment Change data, private businesses in the US hired 174K workers in January of 2021, beating market forecasts of an increase of 49K.

The creation of new jobs in the US has furthered the case against the Joe Biden administration’s coronavirus stimulus package.

As a result, the USD/GBP exchange rate could suffer as the outlook for the US economy becomes increasingly uncertain.


The US Dollar was supported by the ISM Non-Manufacturing PMI which rose to 58.7, better than the 56.8 forecast.

Pound (GBP) Struggles as UK Services PMI Contracts

The Pound found itself struggling against the US Dollar today as the UK services PMI showed a steep contraction at the start of 2021.

Although expected, the contraction to 39.5 signified that the UK economy has continued to suffer as the UK entered a further national lockdown.

Tim Moore, Economics Director at IHS Markit commented on the figures, and was notably upbeat about business optimism:

‘While the UK economy is on course to contract sharply during the first quarter of 2021, businesses remain confident that pent up demand and an easing of pandemic restrictions will provide a springboard to recovery later this year.’

‘Positive news on the UK vaccine rollout pushed up business optimism to its strongest since May 2014 and this improvement contrasted with a decline in confidence reported by service providers in the euro area during January.’

Bank of England Interest Rate Decision in Focus

The Pound to US Dollar exchange rate will continued to be dictated by any further coronavirus developments, with increased global worries pushing investors to buy more into the safe-haven US Dollar.

Pound traders will also be awaiting tomorrow’s Bank of England’s (BoE) interest rate decision, though expected to stay unchanged, any dovish comments from the policy meeting will drive the Pound down.

In US news, ‘Greenback’ investors will be monitoring the latest US initial jobless claims data. Any indications of worsening unemployment could weigh on the USD.

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TAGS: Forecasts