Pound US dollar exchange rate: GBP flat as Trump slaps tariffs on Mexico

0
39


On Friday morning UK consumer confidence jumped to an eight-month high, however Sterling was left flat. The GfK consumer sentiment index rose to a higher-than-forecast -10 in May from April’s reading of -13. This was the highest since September 2018 thanks to solid demand from British households. However, GfK stated that it expected any further gains to be limited while Brexit uncertainty around the UK’s departure from the EU on 31 October plagued the pound.

Joe Staton, GfK Executive said: “Consumers will need to be convinced in heart, head and wallet that Brexit’s murkiness has finally come to an end.”

Meanwhile, reports have suggested that the Trump administration has decided to escalate trade tensions with other countries causing risk-appetite continues slide. 

Washington unexpectedly said it will hit all goods coming from Mexico with tariffs, which likely provided the safe-haven USD with an upswing of support. 

In a Tweet, US President Donald Trump wrote: “On June 10, the United States will impose a 5 percent Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP.

“The Tariff will gradually increase until Illegal Immigration problem is remedied.”

Commenting on this, Chief Market Economist at Mizuho Bank, Daisuke Karakama said: “The news on Mexican tariffs came just as the United States is imposing tariffs on China, and the timing is stirring up the markets.

“Headlines related to trade issues come in short, unpredictable bursts. Currency market reaction is there quite intense, but also tends to be short-lived.”

Looking towards Friday afternoon, the pairing could slide following the release of the US Chicago PMI. 

If May’s PMI rises higher than expected, it could provide the US dollar with an upswing of support.

Meanwhile, looking ahead to Monday it is likely Sterling could rise against the “Greenback” following the release of the UK manufacturing PMI. 

If the data reveals that manufacturing activity increases at a pace that is quicker than forecast, it could buoy the pound. 

LEAVE A REPLY

Please enter your comment!
Please enter your name here