Pound US dollar exchange rate: GBP benefits from unemployment drop

Jermaine Castillo
August 17, 2018

Meanwhile, developments in Brexit negotiations or the perceived chances of a "no deal" Brexit will continue to influence the Pound to Euro (GBP/EUR) exchange rate throughout the week too.

GBP/AUD has recovered most of last week's losses since last Thursday, but "no deal" Brexit fears have been keeping a lid on Sterling (GBP) strength.

Still, the New Zealand Dollar has been unable to recover either due to many factors making investors hesitant to buy riskier trade-correlated currencies.

"So, recognising there will be a great deal of volatility in sterling in both directions as we have news and rumour around Brexit you can see a weakening trend for sterling. we are generally underexposed to sterling and position for sterling to weaken a bit more from here", he said.

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Amid a lack of fresh drivers, concerns about how the Brexit process could impact Britain's economic outlook continued to keep pressure on Sterling on Monday.

In the absence of any new data today and with no-deal Brexit fears having cooled somewhat, the Pound is trading narrowly with the majority of its peers.

As a result, the currency has been highly unappealing amid last week's rise in trade tensions between the U.S. and China, as well as the emerging currency crisis in Turkey. As a result, the Turkish crisis has caused investors to sell the Euro. However, the rally may have ended last week as a series of global uncertainties and the latest Reserve Bank of Australia (RBA) developments provided cause for concern.

New Zealand's economic calendar will be a little quieter this week, so the Pound to New Zealand Dollar (GBP/NZD) exchange rate is more likely to be driven by United Kingdom data or political news in the coming sessions.

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The latest stats showed a downturn in the United Kingdom unemployment rate in June, with the figure now sitting square at 4 per cent.

On the other side of the pairing, the US Dollar may be impacted by domestic retail sales for July which are due to be published on Wednesday. The Pound could stumble if United Kingdom inflation falls short of forecasts.

Investors are highly anticipating United Kingdom job and wage data on Tuesday, as well as United Kingdom inflation stats on Wednesday, which could bolster Pound support if they impress.

Turkey has seen surging inflation in recent months, but not higher interest rates to match.

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On top of concerns that the United Kingdom may not reach a Brexit deal with the European Union, investors have also been disappointed by data indicating that United Kingdom economic activity is being negatively impacted by Brexit uncertainty.

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