industry

Pound US dollar exchange rate: GBP/USD slips as UK economy runs risk of stalling


The study found that business activity stagnated, and levels of staffing declined for the first time since December 2012; following this the pound US dollar exchange rate dropped lower.

Chris Williamson, the Chief Business Economist at IHS Markit blamed Brexit for the poor figure, stating:

“The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slower slowdown in the global economy.

“[…] Service sector employment fell for the first time in the past six years in a sign that the slowdown is feeding through to the labour market.”

Yesterday also saw another poor UK PMI for the construction sector, with the findings showing that January was demonstrated the slowest rise in business activity for ten months, as employment growth in the sector hit a two-and-a-half year low. 

Monday’s release of US factory orders for November also fell unexpectedly with a sharp decline in demand for machinery and electrical equipment, suggesting a slowdown in manufacturing at the end of 2018. 

Despite this poor data, the pound US dollar exchange rate remained lethargic over the course of Monday afternoon.

This afternoon will likely see some movement in the pairing, as the US ISM non-manufacturing PMI is due, with an expected slip from 58 to 57.1, which could see the pound make some advances. 

Tomorrow, US President Donald Trump will give his State of the Union address, which could cause movement in the pairing. 

As there is a lack of economic data for the pound tomorrow, the focus is likely going to shift back to Brexit negotiations as Wednesday will be the final day of discussions of “alternative arrangements” to the Irish backstop, which could see Sterling slip if MPs are not able to make any significant progress on agreeing anything. 



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