Pound US Dollar exchange rate: GBP/USD lingers around 28-month lows

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The pound edged up from 28-month lows against the US dollar as UK GfK consumer confidence rose in July. Confidence rose from June’s -13 to -11 as five of the six measures increased. Meanwhile, on Wednesday officials from the United States and China met for the second day of in-person talks in Shanghai. The second day of talks comes after a series of attacks from President Donald Trump via Twitter, as he accused China of stalling. 

The US President stated that China seemed to be backing off on the promise to buy US farm goods, and warned the outcome would be worse for China if they stalled in the hope he would not win re-election in November 2020.

In response, China’s state-owned Global Times said if “Washington still holds the illusion that Beijing will somehow cave in and compromise on issues concerning sovereignty and other related core interests to reach a deal, then no deal is fine.”

This morning, Chinese Vice Premier Liu He met and exchanged handshakes with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. 

However, officials did not make any public remarks about the progress of talks. 

Meanwhile, on Tuesday US consumer confidence hit its highest level since November 2018.

The Conference Board’s consumer confidence index jumped to a higher-than-forecast 135.7.

Confidence rebounded in July despite heightened trade tensions as recipients stated jobs were plentiful, business conditions were good and income was likely to rise. 

Consumers seemed to shrug off US-China trade tensions and signs of a slowing US economy, which buoyed the dollar as consumer spending accounts for around 70 per cent of economic activity. 

Commenting on this, Chief Economist at Amherst Pierpont Securities, Stephen Stanley noted: “These days, it seems that everywhere you turn, the news regarding the consumer is strikingly good.”

Looking ahead to this afternoon, the US dollar could slide against the pound following the US Federal Reserve FOMC meeting. 

If the Fed slashes rates by a more aggressive 50 basis point cut, the dollar could fall. 

Meanwhile, it is likely the pound will remain under pressure ahead of Thursday’s Bank of England (BoE) interest rate decision. 

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