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Trade Uncertainty and US Non-Farm Payrolls Limit US Dollar Recovery

Last week’s high: $1.4096

Last week’s low: $1.3967

GBP/USD Advances despite US Dollar Recovery

Despite weak UK data and some brief bursts of US Dollar strength, the Pound to US Dollar exchange rate has largely gained over the past week and could continue to climb if US data fails to impress in the coming sessions or if markets remain anxious about the possibility of a ‘trade war’.

The US Presidential administration has been adamant on its stricter tone on trade with China, which has left markets anxious that a ‘trade war’ is still possible.

On top of trade war jitters, the US Dollar fell at the end of last week due to a disappointing US Non-Farm Payroll report. US job stats fell short, causing bets of four 2018 US interest rate hikes from the Federal Reserve to fall.

On Monday, GBP/USD saw another jump on reports that China was looking at devaluing the Chinese Yuan (CNY) as part of its trade actions against the US. GBP/USD briefly touched a high of 1.4158 on Monday afternoon in reaction to the news.

USD Outlook: US Inflation and Trade Developments in Focus

Wednesday’s US inflation data is likely to be the most influential dataset for Pound to US Dollar exchange rate this week, as it could influence Federal Reserve interest rate hike bets if it surprises investors.

US Consumer Price Index (CPI) results from March are forecast to have improved from 2.2% to 2.4% year-on-year, with the core yearly figure forecast to rise from 1.8% to 2.1%.

The Federal Reserve’s latest meeting minutes will also be published on Wednesday and could give investors a better idea of how likely the Fed is to ramp up the pace of interest rate hikes in the coming year.

Of course, any notable developments regarding trade issues between the US and China could influence the US Dollar outlook too.

Key Events

11th April

13:30 USD Consumer Price Index (YoY)

13:30 USD Consumer Price Index Ex Food and Energy (YoY)

19:00 USD FOMC Meeting Minutes

13th April

15:00 USD University of Michigan Confidence Index


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

Arron Morris
Senior Currency Broker
T: 01442 892 065

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