The Pound slides intraday with inconclusive Brexit news, while US Dollar gains strength. The exchange rate Pound to Dollar breaks below 1.3100 levels.
Fed Chairman Powell’s speech is the most awaited event on 27 Aug. His speech at Jackson Hole will review the monetary policy to send further signals to market participants.
The global market sentiment has improved recently after the pandemic spread panic ripples across various countries in March. The US Dollar, the Japanese Yen, and the Australian Dollar are the most volatile as they relate closely with the global equity market.
UK PMI shows that business activity is picking up in August. It is growing at the fastest pace since 2013. Both manufacturing and services sectors are recovering, and customer demand is improving.
Exchange Rate Pound to USD Strengthens With Retail Sales Data
The GBP/USD exchange rate has brought strong data this month. The exchange rate Pound to Dollar continues to remain at a multi-month high. After March 2020, the GBP/USD currency pair is at its highest level in August.
The GBP to Dollar foreign exchange rate closed for the week ended 21 Aug at 1.3087. Once again, the talks between the United Kingdom and the European Union face a slowdown in reaching a trade agreement. Chief Negotiator Barnier states that an agreement is unlikely. The deadline in October now remains the lifeline for the two regions.
There is a sense of urgency for a review in monetary policy, and Fed Chairman Jerome Powell will speak about a review of policy at Jackson Hole. Stimulus measures have been high in the US, and interest rates are close to zero.
Financial stability is the main concern of the Fed currently.
The US Dollar will see growing demand if there is a positive signal from initial jobless claims, consumer confidence, and personal spending in July.
The Euro Bloc Recovery Loses Momentum
The EUR/USD currency pair is facing downward pressure and is hovering at the weeks low. Though it tried to rally during the week, it shows signs of exhaustion. On the 18 and 19 of Aug, the currency pair tried a move past its resistance at 1.19 but was unable to cross 1.1967.
The Euro to US Dollar exchange rate (EUR/USD) closed at 1.1795. The Euro has been going strong of late. The EUR/USD pair has gone up 6.5%.
British Pound Reacts with Good Macroeconomic Data
The Pound exchange rate has improved with good macroeconomic data. There was no breakthrough in the trade deal from the last round of trade talks. This status quo has to end. Else, the EUR/GBP may move lower.
The EUR/GBP currency pair has been consistently moving downward last week. The Euro to Pound exchange rate pair closed last week just above 0.9000.
The Euro to Pound exchange rate (EUR/GBP) saw a high of 0.9073 on Monday and a low of 0.8942 on 21 Friday. It, however, bounced upwards to close at 0.9009.
The exchange rate pair Euro to Pound has strong support at 0.8939. If the pair crosses last week’s high of 0.9073, it may move to reach levels of 0.91 levels. The currency pair has been moving up and down at the 0.90 level.
Brexit Worries Exchange Rate Pound as it sees Intraday Selling
The GBP/USD pair has been moving within a tight range between 1.3268 and 1.3063 throughout last week. It closed at 0.3087 on Friday 21 Aug.
The demand for the USD currency has increased, while Brexit worries continue to torment investors in the Eurozone. If the Exchange rate Pound to Dollar falls below the week’s lows or sees a sustained break below 1.3100 levels, it may see a further downslide.
EU Chief Negotiator Michel Barnier has announced that a breakthrough was not reached in the recently held Brexit talks. The Sterling has weakened with the talks reaching a deadlock.
In the UK, Retail sales for July have improved almost 2% above forecast. The Manufacturing PMI Flash for August is at 53.8, while it was at 53.3 in July. UK Services PMI has improved from 60.1 in August to 56.5 last month.
The US labour market shows disappointing results though Initial Claims saw a rebound.
Japanese Yen Sensitive to Volatility
The GBP/JPY pair closed at 138.43 on 21 Aug. The exchange rate Pound to Yen needs momentum to break beyond ¥140 level. It has strong support at a ¥136 level. Buyers are willing to take a position every time, the yen dips.
Japanese Prime Minister Shinzo Abe has brought a $2.2 trillion stimulus package. Government bonds have resurged on the liquidity induced into the economy. Bank of Japan may increase its Government Bonds to implement yield curve control.
Manufacturing PMI has gone up to 46.6 in August from the July data of 45.2. The Japanese economy is seeing a slow revival.
In Australia Manufacturing PMI saw a decline to 53.9 in August from 58.2 in July. Services PMI also saw a decline to 48.1 in August from the previous month data at 58.2
President Donald Trump has brought a ban on WeChat and TikTok Chinese companies. Further, he has cancelled plans on talks with China. He says “the trade deal means less to me”.