Pound to US Dollar Up, UK Car Sales Rise
The Pound to US Dollar (GBP/USD) exchange rate edged higher this morning. The pairing is currently at around $1.31 in forex trading.
Sterling rose against the dollar, following today’s release of the UK services PMI for July. It undershot forecasts from 56.6 to 56.5.
However, Britain’s largest sector is performing relatively well. And GBP investors are becoming more optimistic about the nation’s economic recovery.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, was more cautious in his analysis. He said, this undoubtedly good news is masking some underlying problems that will still need addressing.
Employment fell even more quickly in July, as some companies made redundancies in response to worries. Concerns were about the length of the recovery.
Other service providers found new opportunities to hire talent and fill vacancies from growing numbers of applications, Brock said.
Forex news reports UK new car sales improved by 11% in July. New car sales are rising for the first time this year. With that, Pound (GBP) investors have become more positive about the economy.
Dollar Falls amid Growing Concerns over US Economy
The US Dollar fell against the Pound after the currency’s biggest competitor the Euro (EUR), edged higher. This was after Eurozone companies posted the fastest growth in two years.
As a result, forex investors have flocked the US Dollar for the Euro’s safe-haven instead.
Piotr Matys, senior emerging markets currency Strategist at Rabobank, was downbeat about the US Dollar.
He said, a consolidation or a modest corrective rebound is inevitable after the sharp fall last month. Market sentiment towards the dollar remains negative.
This is due to dominating concerns about the scale of the coronavirus pandemic in the U.S.
Meanwhile, the US Dollar has benefited from growing uncertainty over the US fiscal stimulus package. It gained from worries over rising coronavirus infections both domestically throughout the world.
Consequently, the ‘Greenback’ has continued to benefit from its safe-haven status.
News reports the US ISM non-manufacturing PMI for July is expected to dip from 57.1 to 55. However, the American economy is performing relatively well despite the coronavirus pandemic.
And this is unlikely to drag down the ‘Greenback’ significantly.
Some investors are worried the U.S. response to the coronavirus pandemic is becoming a blow to the dollar. It is potentially accelerating what has been a slow erosion in the greenback’s status as the world’s dominant reserve currency.
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