May 10, 2021 - Written by John Cameron
STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Rises as Boris Johnson Reiterates Plan to Ease Lockdown on 17 May
GBP/USD Exchange Rate Edges Higher as UK Economic Confidence Continues to Grow
The Pound US Dollar (GBP/USD) exchange rate rose by 0.7% today after Prime Minister Boris Johnson reiterated that the UK’s roadmap for easing lockdown restrictions ‘remains on track’. The pairing is currently trading around $1.40.
Sterling headed higher against the ‘Greenback’ today as confidence in the UK economy continues to grow, with England set to further ease lockdown restrictions on 17 May.
Boris Johnson told the BBC’s Andrew Marr Show on Sunday:
‘The roadmap remains on track, our successful vaccination programme continues – more than two-thirds of adults in the UK have now had the first vaccine – and we can now look forward to unlocking cautiously but irreversibly.’
The Pound (GBP) has also benefited from the Scottish National Party’s (SNP) narrow miss of achieving a majority in the Scottish Parliament.
As a result, GBP traders are more hopeful that this could prevent the break-up of the UK, despite Nicola Sturgeon’s warning to Boris Johnson that a Scottish independence referendum was a matter of ‘when, not if’.
Marios Hadjikyriacos, investment analyst at XM, commented:
‘With political risk fading for now and the Bank of England preparing the ground for ending QE later this year as the British economy kicks into higher gear, the outlook for sterling remains favourable.’
US Dollar (USD) Exchange Rate Sinks as US Payrolls Fall Below Forecasts
The US Dollar (USD) has continued to fall today following last week’s dismal US payrolls data. Friday saw April’s nonfarm payrolls data fall massively below forecasts from 770 thousand to 266 thousand, despite forecasts of an increase to 978 thousand.
CMC Markets analyst Michael Hewson commented on the payrolls figure:
‘US payrolls report threw an enormous monkey wrench into this narrative after a huge miss to the headline expectation, as the US economy added 266,000 jobs in April, well below the consensus of one million that was predicted.’
According to the latest release, the US economy had only produced 266,000 jobs last month, falling blow expectations and dampening confidence in the US economy.
Silvia Dall’Angelo, the senior economist at the investment manager Federated Hermes, commented on the data:
‘The US labour market will continue to improve, as the economy re-opens and confidence comes back, supported by further progress in the vaccine rollout and fiscal stimulus. However, as the April report shows, the process of healing will be lengthy, possibly somewhat bumpy, and it might be incomplete as the crisis could leave some degree of scarring in the labour market.’
Rising tensions between China and Australia have, however, prompted demand for the safe-haven ‘Greenback’ today. As a result, we could see the USD/GBP exchange rate claw back some of its losses if risk sentiment further sours.
Pound US Dollar Exchange Rate Forecast: Could an Upbeat Bank of England Further Boost Sterling?
Pound (GBP) traders will await tomorrow’s speech from Andrew Bailey, the Governor of the Bank of England (BoE).
Any upbeat comments about the outlook for the British economy would further drive up the Pound to US Dollar exchange rate.
US Dollar (USD) investors will await a speech from John Williams, the President of the Federal Reserve Bank of New York.
If Williams confirms fears for the outlook for the US economy following the below forecasts payrolls figures, then the Pound to US Dollar exchange rate could continue to head higher.
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TAGS: American Dollar Forecasts Pound Dollar Forecasts