- Pound (GBP) pares yesterday’s BoE rally
- Brexit concerns return to drag on the Pound amid concerns of London’s financial gateway status
- US Dollar (USD) rises on safe haven flows after Trump moves to ban TikTok & WeChat
- US Jobs report expected to show 1.6 million jobs created in July
After two consecutive days of gains, the Pound US Dollar exchange rate is trending lower on the final trading da of the week. The pair settled on Thursday +0.26% at US$1.3149. At 06:15 UTC, GBP/USD trades -0.2% at US$1.3119.
So far, GBP/USD is on track for 0.2% gains across the week, which would mark the third straight week of gains.
The Pound is losing grip of yesterday’s Bank of England inspired gains. The central bank kept interest rates on hold at 0.1%, as expected. The BoE was also less dovish than expected over the UK economic outlook, upwardly revising GDP to -9.5% in 2020, up from -14%.
With the BoE in the rear view mirror Brexit woes have returned to drag on the Pound, with London’s financial gateway status in question. As Brussels attempts to limit the activities that can be carried out from London, more businesses and jobs are crossing over to the EU.
The US Dollar has shot higher in early trade on safe haven flows after President Trump takes aim at Chinese tech stocks. The White House announced the ban of two popular Chinese apps, Tencent’s WeChat and ByteDance’s TikTok.
The move will heighten already strained tensions between Trump and Beijing. The mood across the financial markets has soured and investors are moving out of riskier assets and currencies and into safe havens such as the US Dollar.
All eyes will now turn towards the US non-farm payrolls. The closely followed US jobs report is expected to show that 1.6 million jobs were created in the US in July. However, weak lead indicators from ADP payrolls and the employment subcomponent of the ISM non-manufacturing report point to a downbeat reading. The resurgence of coronavirus in the US since mid-June is showing signs of impacting the labour market.
