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Pound to Dollar Rate Rebounds on UK Data

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The pound regained its footing on Friday after falling sharply a day earlier, steadying itself enough to post a second week of gains against the dollar. Strong retail sales data and business surveys showed the UK economy might already be on the road to recovery following its worst annual contraction in 300 years.

Retail sales soared in March as consumers prepared for the partial easing of lockdown restrictions, according to official figures from the Office for National Statistics that also showed record peacetime government borrowing. Sales volumes jumped 5.4% in March from February; exceeding economists forecast of 1.5%.

A survey showed a torrent of orders swept through British businesses in April as the government initiated the latest phase of its roadmap out of lockdown, indicating a rapid economic recovery. The preliminary UK composite purchasing managers index (PMI) increased to 60.0 in April from 56.4 last month – its highest reading since 2013 and surpassing economists’ forecasts of a rise to 59.

Good news was in plentiful supply for the pound as the week concluded, with consumer sentiment rising to its highest level since the start of the pandemic this month, the GfK Group consumer confidence showed on Friday – although the increase was smaller than forecast.

By the end of trading for the week, the pound vs dollar rate had settled at 1.388, before edging up to 1.39 this morning

Dollar falls as yields trade in a narrow range

The dollar’s dip against the pound on Friday was compounded by languishing US yields. Meanwhile, US factory activity surged in early April, although this was tempered by manufacturers’ struggles to get raw materials and other supplies for production – a problem that is accentuated by a boom in domestic demand as the economy reopens.

The IHS Markit US manufacturing PMI rose to 60.6 in the first half of April, from 59.1 in March – the highest reading since the index began in 2007 and exceeding economists forecast of a rise to 60.5. Manufacturing accounts for 11.9% of the US economy and a reading above 50 indicates growth for the sector.

According to Chris Williamson, chief business economist at IHS Markit: “The U.S. economy is enjoying a strong start to the second quarter, firing on all cylinders as loosening virus restrictions, an impressive vaccine roll-out, a brighter outlook and stimulus measures all helped boost demand,”

Another report on Friday showed new home sales in the US rocketed to a multi-year high in March. The more than 14-1/2-year high was made possible by the massive $1.9 trillion pandemic rescue package and increased vaccinations against Covid-19, which have boosted the economy.

Looking ahead

A dearth of economic data from the UK this week means we must wait until Tuesday evening for the first release when the latest BRC shop price index is revealed.

In contrast, it’s a busy week in the US, which kicks off today with durable goods orders for March.

The post Pound to Dollar Rate Rebounds on UK Data appeared first on Pound Sterling Forecast.



Source: https://www.poundsterlingforecast.com/2021/04/pound-to-dollar-rate-rebounds-on-uk-data/


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