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Pound to Dollar Weekly Forecast: GBP/USD Exchange Rate Rangebound as Markets Await Outcome of EU Vaccine Summit

March 25, 2021 - Written by John Cameron

The Pound to US Dollar exchange rate is rangebound this afternoon as Pound investors await the outcome of the EU vaccine summit.

At the time of writing the pair are currently trading at around $1.3726 with the US Dollar supported by better-than-expected GDP growth and decrease in jobless claims from the US.

Pound Sterling (GBP) Exchange Rate Steady Amid EU Summit

The Pound is steady this afternoon as both markets and investors await the outcome of the EU’s vaccine summit this afternoon.

The relationship between the UK and EU has soured after EU members said that they may block exports of the AstraZeneca vaccine from the bloc.

The UK has had a so far successful vaccine rollout with over 30 million adults across the country receiving a dose of the coronavirus vaccine.

However if the EU do decide to ban exports the UK’s roadmap out of lockdown could be dented and Sterling could suffer losses.

Michael Hewson, chief market analyst at CMC Markets UK, commented on the row between the UK and EU saying:

’Tensions between the EU and UK still remain fairly elevated, despite efforts to cool the narrative, while the recent comments from Thierry Breton, the EU’s internal market commissioner, accusing the UK of vaccine nationalism still suggest the potential for a misstep, as feelings continue to run high, particularly on the EU side, where the sense of grievance remains especially elevated.’

US Dollar (USD) Exchange Rate Muted despite Positive US GDP Data

The US Dollar has been muted against the Pound this afternoon despite positive GDP and jobless claims data from the US.

US GDP grew 4.3% in Q4 of 2020, according to the final estimate from the Bureau of Economic Analysis.

Furthermore, new US jobless claims fell to 684,000 last week, the lowest number since the start of the coronavirus crisis.

The US Dollar has found fresh support today following reports that the US economy will recover from the pandemic more quickly than other countries and more importantly, Europe, causing investors to be more optimistic surrounding the ‘Greenback.’

GBP/USD Exchange Rate Forecast: UK Retail Sales in Focus

For Pound investors, Friday will see the release of retail sales figures for February from the UK, which are forecast to show a 2.5% growth in the sector which would add renewed support to Sterling.

For US Dollar traders, tomorrow’s US PCE inflation data could cause the US Dollar to falter if it misses forecasts, as the data is the Federal Reserve’s preferred measurement of inflation.

If the PCE data dos fall way below forecasts of 0.4%, investors will be more cautious surrounding the Fed’s tone in the coming months.

The Pound US Dollar exchange rate will also be driven by any further coronavirus developments, and if the EU do decide to block vaccine exports then the Pound would suffer.

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