Last week’s high: $1.3265
Last week’s low: $1.2994
US Dollar Rebounds thanks to Safe Haven Demand as Brexit Failure Knocks Sterling
For most of last week, the Pound to US Dollar exchange rate was unable to advance despite more weak US data weighing on the US Dollar. This is because investors found the US Dollar relatively more appealing as a safe haven currency, as other major economies also appeared to be hit by the ongoing global economic slowdown.
As the Reserve Bank of New Zealand (RBNZ) took a surprisingly dovish tone, and bets of interest rate cuts in some major central banks rose, investors were less eager to take risks and the US Dollar found some resilient support.
This helped the US Dollar to secure gains versus a weak Pound, even despite some disappointing US growth and Personal Consumption Expenditure (PCE) data towards the end of the week.
The Pound’s weaknesses piled up throughout the week, as the future of both the Brexit process and the UK government fell into question. Prime Minister Theresa May has indicated she could step down from the leadership during the next phase of the process.
Even as the government’s Brexit deal was defeated for a third and possibly final time, the Prime Minister is likely to continue to face calls to resign from within her Conservative Party
This uncertainty limited the Pound’s appeal, even as no-deal Brexit jitters remained relatively mild.
USD Outlook: Brexit Developments and US PMI Stats in Focus
With the US Dollar steadying thanks to market demand for safe havens, this week’s upcoming US data could offer the currency even more support if it impresses investors.
Key US data on the way includes Monday’s US retail sales figures from February, and ISM’s US manufacturing PMI for March.
Durable goods orders will follow on Tuesday, with non-manufacturing PMI data on Wednesday.
If they beat expectations the Pound to US Dollar exchange rate could be in for further losses, but any weak data would worsen concerns about the global economic slowdown hitting US activity and this may make it easier for GBP/USD to rebound.
Meanwhile, Pound investors will remain focused on developments in UK politics and Brexit, although upcoming PMI data from Markit could prove influential if it surprises.
With under two weeks until the current Brexit date of 12th April, Pound investors are highly anxious amid a lack of a solid resolution to the Brexit plan. Today’s second round of parliamentary ‘indicative votes’ are highly likely to be influential.
09:30 UK Manufacturing PMI
13:30 US Retail Sales
15:00 US Manufacturing PMI
15:00 US Business Inventories
09:30 UK Construction PMI
13:30 US Durable Goods Orders
09:30 UK Services and Composite PMI
15:00 US Non-Manufacturing PMI
09:30 UK Labour Productivity
13:30 US Non-Farm Payroll Report
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Foreign Exchange Manager