Pound to USD Exch Rate Rises, USD Down
The Pound to US Dollar (GBP/USD) exchange rate edged higher on forex trading today. The pairing is currently fluctuating around $1.26.
The US Dollar (USD) fell today as risk-on trade has weakened the greenback. Reports that China’s economy is rebounding despite the Covid-19 pandemic are weighing on the dollar.
Consequently, investors have sought out riskier assets as the world’s second-largest economy, China, continues to improve. America appears to be lagging.
Goldman Sachs Zach Pandi commented on the ‘Greenback’s performance:
What’s holding them back really from enthusiasm around the currency is tensions with the U.S. ahead of the election.
This was a comment from Goldman Sachs Zach Pandi on the ‘Greenback’s performance.
Meanwhile, yesterday’s release of the latest US CPI data edged higher by 0.6%. But it was not enough to boost confidence in the US economy.
Chris Rupkey, chief economist at MUFG in New York, said the economic downturn is going to last longer. That is with the second wave of the coronavirus pandemic spreading across the nation. This extended period of weak growth and soft demand will keep the inflation genie locked in her bottle longer.
In US economic news, today will see the release of the latest US industrial production figure for June. It is expected to rise from 1.4% to 4.4%. As a result, we could see optimism grow for America’s economic recovery.
Pound Rises following UK Inflation Data
The Pound rose today in forex following the release of the latest UK Consumer Price Index for June. It beat forecasts and rose from 0.5% to 0.6%. Consequently, investors have become more optimistic about Britain’s economic recovery.
Samuel Tombs of Pantheon Economics said the small rise in CPI inflation in June is nothing to worry about. It was driven by the volatile computer games component and they still expect the headline rate to fall in Q3. The data won’t stand in the way of the Monetary Policy Committee doing more to stimulate the economy in 2020.
Today saw the Bank of England’s policymaker, Silvana Tenreyro, declare that she was prepared to push for fresh stimulus measures. This could aid the UK’s struggling economy. She also said that a ‘V-shaped’ economic recovery was unlikely.
In forex news, pound investors will be looking ahead to tomorrow’s release of the UK ILO Unemployment Rate for May. If employment continues to grow, the FX market could see Sterling shed some of its gains.
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