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GBP/USD Exchange Rate Flat as Trump’s 25% Tariffs Take Effect

Last week’s high: $1.3151

Last week’s low: $1.2973

 

Safe-Haven US Dollar Benefits as Trump’s Tariffs Weigh on Risk Appetite

Last week reports emerged suggesting that China had backtracked on nearly all aspects of the US-China trade agreement, which caused the Pound US Dollar exchange rate to slip.

This was confirmed on Wednesday when US President Donald Trump revealed China ‘broke the deal’.

Meanwhile, data on Thursday revealed that the US labour market may be losing momentum as the number of Americans filing for unemployment fell less than expected.

The US Dollar edged up against the Pound as data also revealed that US producer prices rose moderately in April, edging up by 0.2%.

On Friday, the GBP/USD exchange rate remained flat as Trump’s tariff hike to 25% took effect, further heightening tensions between the US and China.

Meanwhile, UK GDP rose by 0.5% in the first three months of 2019, driven by Brexit stockpiling, however this could do little to buoy Sterling.

 

USD Outlook: Strong US Manufacturing Data to Buoy USD?

On Tuesday, the Pound could slide against the US Dollar following the release of the UK’s average earnings data.

If earnings rise higher than forecast, sentiment in Sterling could also rise, buoying it against the ‘Greenback’.

Added to this, if UK unemployment remains at record lows and the number of people in employment continues to rise the GBP/USD exchange rate could rise.

Meanwhile, the Dollar could slide on Wednesday following the release of US retail sales data, which are expected to disappoint.

However, if the Philadelphia Fed manufacturing survey rises higher than expected, this could provide the Dollar with a boost towards the end of the week.

Friday’s Michigan consumer sentiment index may also buoy USD if the index reveals that consumer confidence in economic activity has risen in May.

 

Key Events

14th May

09:30   GBP Average Earnings (March)

09:30   GBP ILO Unemployment Rate (March)

 

15th May

13:30   USD Retail Sales (April)

16th May

13:30   USD Housing Starts (April)

13:30   USD Jobless Claims (May)

13:30   USD Philadelphia Fed Manufacturing Survey (May)

17th May

15:00   USD Michigan Consumer Sentiment Index (Preliminary) (May)

 

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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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