Broad strength in the US Dollar (USD) weighs on the Pound US Dollar (GBP/USD) exchange rate causing it to struggle near its monthly lows. The USD outlook has gained on US President Joe Biden’s latest infrastructure plans.
GBP/USD has been trending with a largely downside bias. This week, it opened at the level of 1.3791.
GBP/USD has held above last week’s monthly lows of 1.3675. The pair is currently struggling to recover.
On Thursday morning, GBP/USD was again trending close to the week’s opening levels.
This afternoon’s US manufacturing PMI and tomorrow’s US Non-Farm Payroll results could also influence the pairing’s exchange rate outlook.
The Pound has been appealing lately over continued speculation that Britain’s economy will be one of the first major economies to recover from the pandemic. Anticipation for easing of UK lockdowns, is also keeping the outlook strong.
However, Sterling has not been able to hold against a surge in demand for the USD.
Still, the Pound has been avoiding bigger losses, as it held above its worst levels in a month. This was partially due to signs of strength in recent UK data.
Today’s UK manufacturing PMI from Markit was slightly higher than expected.
U.S. Economy Outperforms
On Thursday, the dollar remained strong in early European forex trading. It was near multi-month highs over expectations of strong U.S. economic growth. It was lifted by more fiscal stimulus and an accelerating vaccine rollout.
The Dollar Index was up 0.1% at 93.312 at 2:55 AM ET (0755 GMT). It earlier hit a five-month high of 93.472.
The USD/JPY pair added 0.1% to 110.78 after rising to as high as 110.97, its highest level in a year. The GBP/USD pair shed 0.1% at 1.3759, while the risk-sensitive AUD/USD lost 0.7% to 0.7544.
On Wednesday, U.S. President Joe Biden revealed his long awaited $2 trillion-plus infrastructure rebuilding plan. This injects more funds into the U.S. economy after his recently approved $1.9 trillion stimulus package.
The U.S. economy is already showing signs of a strong recovery with the reopening in large parts of the country because of its aggressive vaccination programme.
Elsewhere, USD/CNY climbed 0.3% to 6.5715, after China released a disappointing Caixin Manufacturing PMI earlier in the day.
The EUR/USD was down 0.1% at 1.1723, not far off the near five-month low of 1.170, following ECB President Christine Lagarde’s dovish Wednesday interview.