Pound US Dollar (GBP/USD) Exchange Rate Flat
Pound US Dollar (GBP/USD) Exchange Rate Flat as PM Announces UK Now Past Coronavirus Peak
Pound Sterling US Dollar (GBP/USD) Exchange Rate Muted as Markets Wait for PM’s ‘Comprehensive Plan’
The Pound Sterling US Dollar (GBP/USD) exchange rate remained muted on Friday. This left the pairing trading at around $1.2562.
Sterling remained flat against the Dollar as Prime Minister Boris Johnson said the UK was now past its peak of the coronavirus pandemic.
Sentiment improved as he noted the government would set out a ‘comprehensive plan’ for reopening next week.
However, Johnson warned against the risk of a second coronavirus spike which dampened sentiment.
UK Manufacturing Takes ‘Abrupt Nosedive’ in April
Data released this morning revealed that the UK manufacturing sector fell further into contraction.
Coronavirus gripped the sector, causing huge disruptions and hurting supply chains. This sent the PMI from 47.8 in March to 32.6 in April.
Business sentiment also remained close to record lows which dampened GBP sentiment.
Commenting on this, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said:
‘Last month’s dismal predictions became a reality in April as the manufacturing sector took an abrupt nosedive into the red with purchasing activity, production and new orders falling at the fastest rates in the near 30-year survey history.
‘There was only one reason for such a ruinous result – the COVID 19 coronavirus pandemic which affected supply chains from beginning to end. Domestic customers deferred orders and export customers thrashed around trying to source a dwindling number of raw materials to keep their supply chains operating before finally giving up. Complicated by government edicts terminating normal business activity, UK companies were forced to put factories on lockdown anyway bringing their operations to a complete stop.’
‘There is no comparable time in history to make predictions against but as production ramps up again in the Far East, the sector remained optimistic that in a year’s time the operating environment will resemble some new normality.’
US Consumer Spending Collapses in March
The Pound remained flat against the Dollar this morning despite the improvement in global risk appetite.
The number of US coronavirus cases rose at the slowest pace for a month, boosting sentiment.
Meanwhile, on Thursday data revealed that millions more Americans filed for unemployment benefits last week. This suggests that the wave of layoffs had spread to industries that were not immediately impacted by disruptions related to the coronavirus.
Added to this, further data showed a collapse in consumer spending in March. This came on the heels of Wednesday’s data showing the US economy suffered its sharpest contraction since the Great Depression.
It also marked the end of the longest expansion in US history, and commenting on this, MUFG’s chief economist, Chris Rupkey noted:
‘The economy continues to print numbers that scare the living daylights out of everyone in the world.’
Pound US Dollar Outlook: US Manufacturing PMI in Focus Today
Looking ahead to this afternoon, the US Dollar (USD) could edge lower against the Pound (GBP) following the release of US ISM manufacturing data.
If the Federal Reserve’s preferred measure of PMI plummets further into contraction, the Dollar will tumble.
Meanwhile, on Monday the ‘Greenback’ could slide further following the release of disappointing US factory orders.
If March’s factory orders tumble further than expected due to the coronavirus crisis, the Pound US Dollar (GBP/USD) exchange rate will edge higher.