{"id":11354,"date":"2019-10-03T07:00:44","date_gmt":"2019-10-03T11:00:44","guid":{"rendered":"https:\/\/currencylive.com\/?p=11354"},"modified":"2019-10-03T06:49:52","modified_gmt":"2019-10-03T10:49:52","slug":"101207-gbp-usd-pound-lower-as-uk-heads-for-recession","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/","title":{"rendered":"GBP\/USD: Pound Lower As UK Heads For Recession"},"content":{"rendered":"

The pound rebounded off a low of US$1.23 on Wednesday to close the session flat. The pair is once again moving lower on Thursday as investors digest yet more downbeat data for the UK.<\/p>\n

The pound was edging lower in early trade on Thursday following a spate of gloomy business reports. The British economy appears to have tipped into recession as businesses brace themselves for a disorderly Brexit in just a few weeks\u2019 time. The UK\u2019s dominant sector, the service sector slipped into contraction in September with the PMI hitting a six-month low of 49.5. The figure 50 separates expansion from contraction.<\/p>\n

When combining today\u2019s downbeat reading with deeper contractions in both the manufacturing sector and the construction sector, IHS Markit, who produce the reports said that the UK looks set for an economic contraction of -0.1% in the third quarter. This would be the second straight quarter of contraction, after GDP shrank -0.2% in the second quarter. This is a technical recession.<\/p>\n

Brexit talks are continuing after Prime Minister Boris Johnson revealed his final Brexit offer, addressing the problematic Irish backstop issue. So far, the proposal dubbed \u201c2 borders, 4 years\u201d has been well received by Eurosceptics and the DUP, indicating it could make it through Parliament. The EU are still mulling over the plans. Investors are doubtful that they will be accepted. A rebuff could send the pound sharply lower, as the chances of a no deal Brexit would increase dramatically.<\/p>\n

 <\/p>\n\n\n\n\n
Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit?<\/strong><\/td>\n<\/tr>\n
A soft Brexit implies anything less than UK\u2019s complete withdrawal from the EU. For example, it could mean the UK retains some form of membership to the European Union single market in exchange for some free movement of people, i.e. immigration. This is considered more positive than a \u201chard\u201d Brexit, which is a full severance from the EU. The reason \u201csoft\u201d is considered more pound-friendly is because the economic impact would be lower. If there is less negative impact on the economy, foreign investors will continue to invest in the UK. As investment requires local currency, this increased demand for the pound then boosts its value.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/strong><\/p>\n

Dollar Investors Look To Service Sector Data<\/strong><\/h3>\n

The dollar fell out of favour once again in the previous session as concerns grew over the health of the US economy. The US ADP private payrolls report showed that the monthly average number of jobs created was just 145,000 compared to 214,00 a year earlier. These figures show that the pace of hiring is clearly slowing as the demand for hiring weakens.<\/p>\n

The ADP report is closely correlated to the all-important US non-farm payroll, which is released on Friday. With weak private payroll figures and a weak employment component to the manufacturing report investors are not expecting outstanding numbers.<\/p>\n

Prior to the non-farm payroll figures, investors will first consider today\u2019s ISM non-manufacturing data. Like the UK, the service sector is the dominant sector in the US, therefore data covering the sector is watched closely. Analysts are predicting that activity in the service sector slowed to 55 in September, down from 56.4. The level 50 separates expansion from contraction. Should the sector show further weakness, fears of recession could grow, dragging the US dollar lower as investors assume the Federal Reserve will cut interest rates again.<\/p>\n

 <\/p>\n\n\n\n\n
Why do raised interest rates boost a currency\u2019s value?<\/strong><\/td>\n<\/tr>\n
Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

 <\/p>\n\n\n\n\n
What do these figures mean?<\/strong><\/td>\n<\/tr>\n
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.<\/p>\n

For example, it could be written:<\/p>\n

1 GBP = 1.28934 USD<\/em><\/p>\n

Here, \u00a31 is equivalent to approximately $1.29. This specifically measures the pound\u2019s worth against the dollar. If the US dollar amount increases in this pairing, it\u2019s positive for the pound.<\/p>\n

Or, if you were looking at it the other way around:<\/p>\n

1 USD = 0.77786 GBP<\/em><\/p>\n

In this example, $1 is equivalent to approximately \u00a30.78. This measures the US dollar\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the dollar.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

This publication is provided as general information only and is not intended as an exhaustive treatment of its subject. TransferWise Inc. and its affiliates (“we” or “us”) expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of this publication, and you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from us.\u00a0 We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

The pound rebounded off a low of US$1.23 on Wednesday to close the session flat. The pair is once again moving lower on Thursday as investors digest yet more downbeat data for the UK. The pound was edging lower in early trade on Thursday following a spate of gloomy business reports. The British economy appears […]<\/p>\n","protected":false},"author":163946597,"featured_media":5002,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1386,1590,1394,1391,1589,1392,1397,1398],"class_list":{"0":"post-11354","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gbp","8":"category-usd","9":"tag-brexit","10":"tag-federal-reseve","11":"tag-gbp","12":"tag-pound","13":"tag-service-sector-recession","14":"tag-sterling","15":"tag-us-dollar","16":"tag-usd"},"acf":[],"yoast_head":"\nGBP\/USD: Pound Lower As UK Heads For Recession - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Pound Lower As UK Heads For Recession\",\"datePublished\":\"2019-10-03T11:00:44+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/\"},\"wordCount\":911,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100710-gbp-usd-SP-predicts-recession.jpg\",\"keywords\":[\"Brexit\",\"federal reseve\",\"gbp\",\"pound\",\"service sector recession\",\"sterling\",\"us dollar\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2019\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/\",\"name\":\"GBP\\\/USD: Pound Lower As UK Heads For Recession - Currency Live\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100710-gbp-usd-SP-predicts-recession.jpg\",\"datePublished\":\"2019-10-03T11:00:44+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#primaryimage\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100710-gbp-usd-SP-predicts-recession.jpg\",\"contentUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100710-gbp-usd-SP-predicts-recession.jpg\",\"width\":725,\"height\":400,\"caption\":\"GBP\\\/USD: Pound At 11 Week Low vs. Dollar On Brexit Fears\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/currencylive.com\\\/news\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"GBP\\\/USD: Pound Lower As UK Heads For Recession\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#website\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/\",\"name\":\"Currency Live\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/currencylive.com\\\/news\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\",\"name\":\"Fiona Cincotta\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g\",\"caption\":\"Fiona Cincotta\"},\"description\":\"Editor - Senior Financial Market Analyst Through over a decade\u2019s experience analysing and reporting on global currency markets, Fiona has a gained a deep understanding of the fundamental drivers of currencies. She is regularly quoted by international news organisations including Financial Times, Reuters and Bloomberg. Fiona is a familiar face after years of appearances on BBC, Sky News and Fox Business News.\",\"sameAs\":[\"https:\\\/\\\/www.linkedin.com\\\/in\\\/fiona-cincotta-bb4a4845\\\/\"],\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/author\\\/fiona-cincotta\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"GBP\/USD: Pound Lower As UK Heads For Recession - Currency Live","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/","twitter_misc":{"Written by":"Fiona Cincotta","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#article","isPartOf":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/"},"author":{"name":"Fiona Cincotta","@id":"https:\/\/currencylive.com\/news\/#\/schema\/person\/8ef0fafb6c93f1204150bb907b42cfec"},"headline":"GBP\/USD: Pound Lower As UK Heads For Recession","datePublished":"2019-10-03T11:00:44+00:00","mainEntityOfPage":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/"},"wordCount":911,"image":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#primaryimage"},"thumbnailUrl":"https:\/\/currencylive.com\/news\/wp-content\/uploads\/2019\/08\/100710-gbp-usd-SP-predicts-recession.jpg","keywords":["Brexit","federal reseve","gbp","pound","service sector recession","sterling","us dollar","usd"],"articleSection":["GBP","USD"],"inLanguage":"en-US","copyrightYear":"2019","copyrightHolder":{"@id":"https:\/\/currencylive.com\/news\/#organization"}},{"@type":"WebPage","@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/","url":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/","name":"GBP\/USD: Pound Lower As UK Heads For Recession - Currency Live","isPartOf":{"@id":"https:\/\/currencylive.com\/news\/#website"},"primaryImageOfPage":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#primaryimage"},"image":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#primaryimage"},"thumbnailUrl":"https:\/\/currencylive.com\/news\/wp-content\/uploads\/2019\/08\/100710-gbp-usd-SP-predicts-recession.jpg","datePublished":"2019-10-03T11:00:44+00:00","author":{"@id":"https:\/\/currencylive.com\/news\/#\/schema\/person\/8ef0fafb6c93f1204150bb907b42cfec"},"breadcrumb":{"@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#primaryimage","url":"https:\/\/currencylive.com\/news\/wp-content\/uploads\/2019\/08\/100710-gbp-usd-SP-predicts-recession.jpg","contentUrl":"https:\/\/currencylive.com\/news\/wp-content\/uploads\/2019\/08\/100710-gbp-usd-SP-predicts-recession.jpg","width":725,"height":400,"caption":"GBP\/USD: Pound At 11 Week Low vs. Dollar On Brexit Fears"},{"@type":"BreadcrumbList","@id":"https:\/\/currencylive.com\/news\/101207-gbp-usd-pound-lower-as-uk-heads-for-recession\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/currencylive.com\/news\/"},{"@type":"ListItem","position":2,"name":"GBP\/USD: Pound Lower As UK Heads For Recession"}]},{"@type":"WebSite","@id":"https:\/\/currencylive.com\/news\/#website","url":"https:\/\/currencylive.com\/news\/","name":"Currency Live","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/currencylive.com\/news\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/currencylive.com\/news\/#\/schema\/person\/8ef0fafb6c93f1204150bb907b42cfec","name":"Fiona Cincotta","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/79afd1dde0d7ad291707268bbcdb9fdb41b2dd29f8088c8cfe9c67cd2a1de0e4?s=96&d=blank&r=g","caption":"Fiona Cincotta"},"description":"Editor - Senior Financial Market Analyst Through over a decade\u2019s experience analysing and reporting on global currency markets, Fiona has a gained a deep understanding of the fundamental drivers of currencies. She is regularly quoted by international news organisations including Financial Times, Reuters and Bloomberg. Fiona is a familiar face after years of appearances on BBC, Sky News and Fox Business News.","sameAs":["https:\/\/www.linkedin.com\/in\/fiona-cincotta-bb4a4845\/"],"url":"https:\/\/currencylive.com\/news\/author\/fiona-cincotta\/"}]}},"jetpack_featured_media_url":"https:\/\/currencylive.com\/news\/wp-content\/uploads\/2019\/08\/100710-gbp-usd-SP-predicts-recession.jpg","amp_enabled":true,"_links":{"self":[{"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/posts\/11354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/users\/163946597"}],"replies":[{"embeddable":true,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/comments?post=11354"}],"version-history":[{"count":2,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/posts\/11354\/revisions"}],"predecessor-version":[{"id":11356,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/posts\/11354\/revisions\/11356"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/media\/5002"}],"wp:attachment":[{"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/media?parent=11354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/categories?post=11354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/currencylive.com\/news\/wp-json\/wp\/v2\/tags?post=11354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}