- Pound (GBP) pauses for breath after rallying over 2% last week.
- UK manufacturing PMI expected to confirm expansion in sector
- US Dollar (USD) had worst monthly performance in a decade in July
- Fitch gives USA a debt warning revising AAA outlook rating to negative
After rallying 2.3% across the previous week, the Pound US Dollar (GBP/USD) exchange rate is consolidating those gains at the start of the new week. The pair settled on Friday at US$1.3090 after having pushed to a fresh 4 month high of US$1.3171 earlier in the session.
At 06:15 UTC, GBP/USD trades flat at US$1.3090 waiting for the next catalyst.
The Pound is holding steady versus the US Dollar even as concerns over rising UK coronavirus cases and no deal Brexit linger.
The government has been considering coronavirus fighting options amid fears that a second wave could hit the UK in early Autumn. Plans floated include lockdown for the over 50’s. The government has also announced that it will ramp up testing in hospitals, nursing homes and laboratories.
Localised lockdowns are in place in parts of Manchester, Lancaster and Yorkshire as the rate of transmission has picked up there.
This week is a busy week for the Pound. The Bank of England rate decision on Thursday will take centre stage. Prior to that, today, investors will focus on the release of UK manufacturing PMI data. Analysts ae expecting confirmation of the 53.6 previously estimated. The level 50 separates expansion from contraction.
The US Dollar experienced its wort month in a decade in July and is looking shaky at the start of the new month. Concerns over a slowing US economic recovery amid rising coronavirus cases, continue to drag on the greenback.
US policy makers have so far failed to clinch a deal to pump more money into the worlds’ largest economy. The Republic and Democrats still have considerable distance between them. S the additional $600 p/week benefits expired on Friday; it is essential that Congress gets a rescue package agreed this week before they go on recess.
Also adding to the US Dollar’s woes was a downwards revision from Fitch rating agency. A growing fiscal deficit prompted Fitch to revise the US outlook from AAA to negative from stable.
Attention will now turn to US manufacturing PMI data which is expected to confirm 51.3 from the provisional reading.
