Mixed UK Data Causes GBP/USD to Soften
Today, the Pound (GBP) has tried to make profits even though the UK GDP only grew by 4.8% in the second quarter of this year. There is mixed sentiment on this which comes as business investment, industrial production and the UK’s balance of trade missed market forecasts.
Notwithstanding the rate at which the UK GDP grew within April to June this year, it remains below the pre-pandemic rate at 4.4% and this means that the economy of the UK is still far behind other countries of the same level. Right now there are predictions that Sterling would continue to struggle as mixed data is still accepted by the markets. If no data is released for the rest of the week, GBP is predicted to have more losses.
UK’s Covid Confidence
Due to the widespread vaccination which has shown to be very effective in preventing sickness and other illnesses, hospitalization has reduced drastically and other signs that showed the pandemic growth have lessened. Following the weekly data taken on the number of covid cases the case has been increasing and this week, there has been an addition of about 12,039 cases which is a 6.5% increase, deaths due to Covid have also been on a low rise.
Furthermore, the program which carries out the vaccination in the UK has begun to reduce and the velocity has slowed down. At the initial stage of the vaccination program, the rollout was very impressive however the country has been surpassed by other EU countries. As a result, there is a possibility that the GBP/USD will undermine the optimism of Covid as cases are on the increase.
Job Claims to Boost US Dollars
After the recent jobless claims, the USD has been seen to be on the firm side. Yesterday, however, it went down as the US CPI held fast. Some experts think that inflation is now at its peak. This report comes as a disappointment to the USD bulls, they have been anticipating another inflation to give the Federal Reserve the pressure they need to tighten the monetary policy especially after the more than expected Non-farm payrolls report.
However, at the look of things, the Fed will not change their plans and this has made a dent in the US dollar as we see the GBP/USD jump by 0.6%. Investors are currently looking at the new initial jobless claims report. The new unemployment benefits are predicted to reduce to about 375,000 and if printed as predicted this will show a successive reduction and the least number of new weekly claimants since June.
