Pound US dollar exchange rate: GBP hits 7-week high on US dollar weakness | City & Business | Finance
This improvement in the pound US dollar exchange rate is mainly down to US economic uncertainty, which has made the pound the more appealing currency of the two.
US dollar traders have responded negatively to Thursday’s inflation rate readings for August, which revealed a slower pace of price growth for the year-on-year measurements.
Although economists don’t think that this will prevent a near-term Federal Reserve interest rate hike, there are concerns that future rate hikes could be delayed because of slower inflation.
Another factor damaging the US dollar and pushing up the pound has been the ongoing US-China trade conflict.
Somewhat lessening hopes of a solution to the ongoing trade spat was US President Donald Trump.
He said: “We are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing.”
Analysts are still calculating the effects of a prolonged trade war between the US and China and some predict that US manufacturers might be hit the hardest.
Among those who are warning about the negative effects of the trade conflict is former US Trade Representative Michael Froman.
He said: “I don’t think the imposition of tariffs are a wise move because it’s a tax, it’s a tax on the consumer ultimately.
“It’s also very disruptive to companies who are trying to manage global supply chains.”
Today has been quieter in terms of UK economic news – pound traders are still processing recently-released Brexit impact papers that detail plans in the event of no-deal.
Among other issues that a no-deal Brexit could cause, the papers estimate that roaming charges could return and the UK government might be blocked from applying for EU grants.
US economic data will be in the spotlight this afternoon, with high-impact retail sales figures coming out ahead of a later consumer confidence readings.
The US sales data for August might cause a US dollar to pound decline, as a slower pace of sector growth is expected.
On the other hand the later University of Michigan consumer confidence score could prove more supportive to the dollar if it reveals a forecast-matching rise for the initial September estimate.
Not all economists are predicting higher consumer sentiment, however, so if this reading also drops then the pound could rise against a weakened US dollar.