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GBP/USD Forecast: Pound to US Dollar Exchange Rate Set to Shed Further Ground on Strengthening ISM Manufacturing PMI

April 30, 2021 - Written by Frank Davies

Pound (GBP) Exchange Rates Falter in Spite of UK Housing Price Index Increase

A solid uptick in the Nationwide house price index was not enough to keep the Pound to US Dollar (GBP/USD) exchange rate from shedding ground.

While prices saw growth of 2.1% on the month in April, reversing the previous month’s -0.3% contraction, this failed to shore up demand for the Pound.

Even with the UK housing market demonstrating renewed signs of strength at the start of the second quarter the potential for Pound exchange rate gains proved limited.

As investors have already priced significant odds of a second quarter growth recovery into the Pound this kept something of a lid on the GBP/USD exchange rate at this stage.

US Dollar (USD) Exchange Rates Benefit from Sharp Increase in Personal Income Data

Demand for the US Dollar, meanwhile, strengthened on the back of a sharp increase in March’s personal income figure.

The arrival of the latest round of stimulus checks saw income jump 21.1% on the month, encouraging hopes of stronger consumer demand to come.

With markets hopeful of the prospect of the world’s largest economy continuing to shake off the impact of the ongoing pandemic USD exchange rates were able to push higher across the board.

Investors also took encouragement from an unexpectedly sharp uptick in the Chicago PMI, which surged from 66.3 to 72.1.

As signs continue to point towards the resilience of the US economy the US Dollar was able to gain strong traction against its rivals.

GBP/USD Exchange Rate Forecast: Fresh ISM Manufacturing PMI Uptick to Support US Dollar Gains

Further losses could be in store for the Pound to US Dollar exchange rate on Monday with the release of the latest ISM manufacturing PMI.

With forecasts pointing towards the index continuing to strengthen, rising to a solid 65, confidence in the health of the sector looks set to improve.

As long as the manufacturing sector remains on course to deliver solid growth in the second quarter the odds of a higher quarterly growth rate are likely to offer support to the US Dollar.

The Pound is unlikely to find any particular support, meanwhile, thanks to the May bank holiday keeping any fresh economic data off the calendar on Monday.

Unless the general sense of market risk appetite picks up once again the Pound looks set to remain on a weaker footing against the rising US Dollar.
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