GBP/USD Exchange Rate Rises, UK Manufacturing PMI Shows Continuation of 14-Month Expansion
The Pound US Dollar (GBP/USD) exchange rate rose this morning following the release of the latest UK factory data for July, grew at one of its fastest rates since the survey was begin. The pairing is fluctuating around AU$1.39 at the time of writing.
Sterling has benefited from the continuation of a 14-month expansion in the UK’s manufacturing sector.
Today’s data has provided some uplift to the nation’s market mood, with the outlook or the UK economy improving following the lifting of lockdown restrictions on July 19.
IHS Markit however highlighted some of the problems facing UK manufacturers:
‘Scarcities, shortages and price rises remained prominent challenges faced by UK manufacturers during July.
‘Raw material, staff and skill shortages were all major factors stymieing output growth and contributing to a further marked increase in input purchasing.’
Confidence in the UK has continued to grow, however, despite a rising infection rate throughout the UK.
Nevertheless, infection rates have fallen below more dire predictions, with hopes growing that the peak of infections could already have been passed.
US Dollar (USD) Exchange Rates Dip Despite Souring Risk-Sentiment
The US Dollar (USD) has benefited from cautious trade today with China – the world’s second-largest economy – show signs of slowing down, with the latest Chinese factory data falling below forecasts.
As a result, demand for the safe-haven US Dollar has risen, with concerns growing about the spread of the Delta coronavirus variant and slowing economic recovery throughout Asia-Pacific sparking worries about the strength of the global economy.
John-Paul Rojas, a business reporter at Sky News, expressed confidence in the US economy, saying:
‘The US economy has recovered to surpass its pre-pandemic peak according to official figures – though growth was slower than expected in the latest quarter.
‘Robust consumer spending fuelled by vaccinations and government stimulus helped gross domestic product (GDP) grow at an annualised rate of 6.5% in the April-June period, according to the bureau of economic analysis.’
In US economic news, today will see the release of the latest ISM manufacturing PMI for July. Could an uptick in the US factory sector see the USD/GBP exchange rate edge higher?
GBP/USD Exchange Rate Forecast: US Factory Orders Data in Focus
US Dollar (USD) investors will await tomorrow’s release of the latest June US factory orders data.
Any improvement could see the ‘Greenback’ rise on growing confidence in the nation’s economic recovery.
Risk sentiment will also continue to drive the USD/GBP exchange rate.
If the Chinese economy looks to be threatened by the growing Delta coronavirus epidemic, then we could see demand rise for the safe-haven US Dollar.
Pound traders will continue to monitor the UK’s Covid-19 developments.
If daily infection rates continue to fall, however, the Pound to US Dollar exchange rate would rise on growing confidence in the UK economy.