{"id":4204,"date":"2018-01-02T00:00:00","date_gmt":"2018-01-02T05:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100290-gbp-usd-manufacturing-pmi\/"},"modified":"2018-01-02T00:00:00","modified_gmt":"2018-01-02T05:00:00","slug":"100290-gbp-usd-manufacturing-pmi","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100290-gbp-usd-manufacturing-pmi\/","title":{"rendered":"GBP\/USD: UK and US Manufacturing in Focus As Investors Brace For A Bus"},"content":{"rendered":"<p>As trading kicked off 2018 the pound was making the most of the weaker dollar. The pound US dollar exchange rate started the new year above the key psychological level of US$1.35.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> 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<p> For example, it could be written: <em>1 GBP = 1.28934 USD<\/em> <\/p>\n<p> <em>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.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 USD = 0.77786 GBP<\/em> <\/p>\n<p> <em>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.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>The pound US dollar exchange rate powered higher across 2017, gaining close to 10%. That is an impressive rise for sterling, given the politically turbulent year the UK has experienced. However, the outlook for 2018 remains unsettled. Analysts are expecting Brexit uncertainties to weigh on the economy in 2018, with economic growth predicted to be 1.5% at best and business investment is expected to grind almost to a halt. Neither prediction is good for the UK economy, which could prevent sterling from rising much higher until there is more certainty over Brexit.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does poor economic data drag on a country\u2019s currency? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Slowing economic indicators point to a slowing economy. Weak economies have weaker currencies because institutions look to reduce investments in countries where growth prospects are low and then transfer money to countries with higher growth prospects. These institutions sell out of their investment and the local currency, thus increasing supply of the currency and pushing down the money\u2019s worth. So, when a country or region has poor economic news, the value of the currency tends to fall. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>After a quiet last week, between Christmas and new year, investors will be pleased to know that here are a few more potentially interesting economic data points this week for the pound. These start to day with manufacturing purchasing manager\u2019s index (pmi). This is a forward-looking indicator which gives an idea as to the health of the manufacturing sector. Last month, the Manufacturing pmi for November recorded a 4-year high, as manufacturing picked up a gear. Analysts are forecasting that the figure with just ease back slightly in December from 58.2 to 58. A figure lower than analysts\u2019 expectations could see the pound weaken slightly.<\/p>\n<h2><a href=\"#dollar-weak-as-it-enters-the-new-year\" name=\"dollar-weak-as-it-enters-the-new-year\"><\/a>Dollar weak as it enters the new year<\/h2>\n<p>The dollar suffered its worst year in over a decade in 2017, not just against the pound, but against its peers as whole. This is perhaps a little surprising given that the Federal Reserve raised rates 3 times in the past year, making it the most aggressive central bank. Added to that, the low US unemployment and the strong economic growth and the dollar definitely appears to have fallen short of where analysts might have expected it to finish the year.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>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 class=\"table table-bordered\">\n<p>Today sees the release of the US manufacturing pmi, which could create some volatility. Looking ahead, this week provide several high impacting data points such as Federal Reserve minutes report and the US jobs report at the end of the week. <\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice 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 or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As trading kicked off 2018 the pound was making the most of the weaker dollar. The pound US dollar exchange rate started the new year above the key psychological level of US$1.35. What do these figures mean? When measuring the value of a pair of currencies, one set equals 1 unit and the other shows [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4205,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1394,1398],"class_list":["post-4204","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-gbp","tag-usd"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/USD: UK and US Manufacturing in Focus As Investors Brace For A Bus - 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\/100290-gbp-usd-manufacturing-pmi\/\" \/>\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=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: UK and US Manufacturing in Focus As Investors Brace For A Bus\",\"datePublished\":\"2018-01-02T05:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/\"},\"wordCount\":824,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100290-gbp-usd-manufacturing-pmi.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100290-gbp-usd-manufacturing-pmi\\\/\",\"name\":\"GBP\\\/USD: UK and US Manufacturing in Focus As Investors Brace For A Bus - 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