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GBP/USD Exchange Rate Falls as Trade Tensions Escalate

Last week’s high: $1.3038

Last week’s low:  $1.2758

 

Safe-Haven US Dollar Rises as US-China Trade Tensions Escalate

On Monday, the safe-haven US Dollar rose against the Pound as trade tensions escalated. With China stating it would raise tariffs on $60 billion worth of US goods.

Meanwhile, the Pound slipped against the US Dollar on Tuesday despite data revealing that UK unemployment fell to a fresh 44-year low.

However, wage growth data revealed that workers’ pay did not rise as high as forecast, suggesting the labour market was cooling.

On Wednesday US retail sales fell unexpectedly as households cut back on the purchase of goods.

This suggested a slowdown in economic growth, however it could do little to stop the ‘Greenback’ rising against the Pound.

The safe-haven USD made further gains after escalating US-China trade tensions were in evidence as Chinese telecoms giant Huawei was slapped with severe sanctions by the US.

Thanks to strong data and Chinese state media claiming that Beijing was prepared to suspend trade talks if Washington continued its tough action against China, USD neared a two-week high on Friday.

 

USD Outlook: Will Dovish FOMC Minutes Weigh on the US Dollar?

Looking ahead to this week, the US Dollar (USD) could slide against Sterling (GBP) following the release of the Chicago Fed National Activity Index.

If April’s activity slides further than forecast it could dampen sentiment in the ‘Greenback’.

On Wednesday the release of the Federal Open Market Committee (FOMC) minutes could weigh on the Dollar.

If the FOMC minutes reveal the Federal Reserve is looking at an interest rate cut in the future GBP/USD is likely to rise.

Key Events

20th May

13:30   USD Chicago Fed National Activity Index (April)

21st May

n/a       GBP Inflation Report Hearings

15:00   USD Existing Homes Sales Change (April)

22nd May

09:30   GBP Retail Price Index (April)

09:30   GBP Producer Price Index (April)

09:30   GBP Consumer Price Index (April)

19:00   USD FOMC Minutes

23rd May

13:30   USD Jobless Claims

14:45   USD Markit PMI Composite (May)

24th May

09:30   GBP Retail Sales (April)

13:30   USD Non-defence Capital Goods Orders (April)

13:30   USD Durable Goods Orders (April)

 

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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

 

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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