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Pound US Dollar (GBP/USD) Exchange Rate Rangebound as Risk-On Markets Limit ‘Greenback’

April 15, 2021 - Written by John Cameron

GBP/USD Exchange Rate Steady as US Retail Sales Beat Forecasts

The Pound US Dollar (GBP/USD) exchange rate held steady this morning after the ‘Greenback’ was undermined by a dovish Federal Reserve. The Fed’s Chairman Jerome Powell suggested that it was unlikely that the bank would raise interest rates until as late as next year.

The pairing is currently fluctuating around $1.37.

Added to this, demand for the safe-haven ‘Greenback’ have been undermined by growing confidence in the global economy.

In US economic data, today saw the release of March’s retail sales figure, which beat forecasts and rose by 9.8%.

James Knightley, the Chief International Economist at ING, commented on the data:

‘Looking further ahead the story remains very positive although we are increasingly likely to see people switching purchases away from "things" to "experiences" as we make up for lost time. Job opportunities are improving markedly while extended Federal unemployment benefits continue through to September giving the unemployed the guarantee of robust financial support should they fail to find work. Jobs shouldn’t be too hard to find though, yesterday’s Federal Reserve Beige Book talked of increased bonus payments to recruit and retain staff, suggesting incomes will continue growing.’

Meanwhile, a sustained dip in US Treasury yields has also limited the appeal of the US Dollar, thus weakening the USD/GBP exchange rate.

Pound (GBP) Steady as UK Restaurant Bookings Soar

The Pound (GBP) held steady against the ‘Greenback’ today due to a lack of any notable UK economic data.

However, UK markets are becoming more confident about the outlook for the British economy, especially now that non-essential shops have reopened, with restaurants and bars also allowed to serve outdoor customers.

The Office for National Statistics (ONS) has also reported that restaurant bookings have soared since England eased some of its lockdown rules.

The ONS said:

‘On Monday 12 April 2021, estimates for UK seated diner reservations were at 79% of the level seen on the equivalent Monday of 2019, the first time their level has exceeded 2% since before the announcement of the latest lockdown in England on 4 January 2021.

‘This coincides with the easing of lockdown restrictions in England on this day, allowing restaurants to open for outdoor dining. The equivalent figures for London and Manchester were 47% and 153%, respectively.’

Pound US Dollar Exchange Rate Forecast: Could a Bullish BoE Boost Sterling?

US Dollar (USD) investors will be awaiting tomorrow’s release of the flash Michigan Consumer Sentiment Index for April.

Any improvement in the outlook for the US economy could further limit demand for the safe-haven USD as risk-on market mood increases.

Escalating US-China tensions could, however, help boost the USD/GBP exchange rate as this would increase demand for the safe-haven ‘Greenback’.

The Pound US Dollar exchange rate could head higher if tomorrow’s speech from the Bank of England’s (BoE) Sir Jon Cunliffe is notably bullish.

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