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Pound US dollar exchange rate: GBP rangebound despite impressive UK growth


The pound is still stuck trading in a narrow range against the US dollar and the majority of its other peers despite a slew of positive UK data, which included a robust GDP report. According to data published by the Office for National Statistics (ONS), UK GDP leapt from 0.2 per cent to 0.5 per cent in the first quarter of 2019. On top of this, business investment in the UK also came in well above expectations, with the UK recording its first rise in investment since 2017, much to the surprise of analysts who had forecast that Brexit jitters in the first quarter would see investors steer clear of the UK. However pound investors appeared to shrug off the data as political uncertainty in the UK continues to dampen Sterling sentiment.

At the same time, trade in the US dollar is limited this morning after the US raised its tariffs on Chinese goods after last-minute trade talks failed to salvage a trade deal before Friday’s deadline.

So far US dollar investors have taken the news in their stride, with the US dollar seeing limited movement despite the hike in tariffs marking a major escalation in trade tensions.

It is likely that markets are choosing to hold their positions until they learn more about how Beijing will respond to the US tariffs.

China’s foreign ministry spokesperson Geng Shuang told the media to “stay tuned” to hear about what measures Beijing will take in retaliation.

Looking ahead, the pound US dollar exchange rate may be forced to relinquish some ground later in today’s session as the US publishes its latest CPI figures.

Economists forecast that the data will reveal US inflation ticked back up from 1.9 per cent to 2.1 per cent in April, likely lifting the US dollar as it would support the Federal Reserve’s decision not to cut interest rates this year. 

Meanwhile pound investors are likely to turn their attentions to next week’s session and the publication of the UK’s employment figures for March.

This could help to strengthen the pound if wage growth in the UK continued to rise through to the end of the first quarter.



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