Pound US dollar exchange rate: GBP stumbles as UK consumer confidence dips | City & Business | FinanceHeat Profit
The GfK consumer confidence reading for the month has seen a decline from -9 points to -10.
Examining the stats in detail was GfK Head of UK Innovation Joe Staton.
He said: “Ongoing concerns about sluggish household income, rising prices paid by consumers in the shops, and the prospect of inflation-busting council tax and interest rate hikes has dented confidence after last month’s surprising rally.
“Despite positive news about upgraded growth forecasts, and the promise of higher wage increases this year, confidence will remain subdued until we feel the positive impact on our purses.
“Consumers have good reason to feel jittery and depressed.”
Another factor keeping the pound down against the US dollar has been increasing tension about the state of the Irish border after Brexit.
The EU is poised to publish a draft Brexit document which is expected to show a requirement that Northern Ireland follows EU single Market rules.
This would seemingly prevent the return to a ‘hard border’ with the Republic of Ireland, but is seen as untenable by both the UK governing Conservative party and its Democratic Unionist Party (DUP) coalition partners.
Looking at the bigger picture, while this document could provide a springboard for a future, beneficial agreement on the Irish border, for now it only emphasises Brexit divisions.
Looking to the US dollar, as well as rising in the USD/GBP exchange pairing, the dollar has also made steady gains against the euro and Indian rupee today.
This strengthening comes after the release of testimony from incoming Federal Reserve Chair Jerome Powell, who spoke to Congress on Tuesday.
USD traders were reassured by Mr Powell’s tone, as he seems set to continue steadily raising US interest rates in 2018 and beyond.
He said: “Despite recent volatility, financial conditions remain accommodative.
“At the same time, inflation remains below our 2 per cent longer-run objective.
“In the FOMC’s view, further gradual increases in the federal funds rate will best promote attainment of both of our objectives.”
The next UK economic news to watch out for will be the Markit manufacturing PMI for February, which is tipped to show a slight decline over the month.
A lower reading will mean lower activity in the manufacturing sector, which could slightly reduce the pound’s value.
Today’s main US news will be the afternoon’s second estimates for GDP growth in Q4 2017.
The quarter-on-quarter figure is tipped to decline from 3.2 per cent to 2.5 per cent; this result could weaken the US dollar ahead of further comments from Mr Powell on Thursday.