The Pound to US Dollar (GBP/USD) exchange rate traded in a narrow range on Thursday as investors continued to assess Prime Minister Andy Burnham’s first week in office while awaiting fresh economic data.
At the time of writing, GBP/USD was trading around $1.3362, down marginally on the day.
DAILY RECAP:
The Pound (GBP) traded with modest losses on Thursday as markets continued to assess Andy Burnham’s first week as Prime Minister.
Sterling had rallied ahead of Burnham’s arrival in Downing Street as investors unwound the political risk premium previously priced into the currency.
However, the Pound edged lower this week amid lingering concerns over how the government’s new spending commitments and tax cuts will be financed.
Losses in Sterling were somewhat limited by hopes that the proposed measures could support economic growth.
Plans including a 20% cut in business rates for pubs, clubs and music venues in England, alongside lower VAT on household energy bills, helped temper some fiscal concerns, although GBP investors remained cautious.
Meanwhile, the US Dollar (USD) lacked clear direction as a quiet US economic calendar and mixed market sentiment left the safe-haven currency rangebound.
While global markets remain concerned about the escalating conflict in the Middle East, broader risk appetite has proved surprisingly resilient despite the worsening geopolitical backdrop.
Some investors continued to hope that diplomatic efforts could eventually produce a peace agreement, although optimism appeared to be fading.
Near-Term GBP/USD Forecast: PMI Surveys in the Spotlight
Looking ahead, the UK’s June retail sales figures will be the first major release on Friday.
Economists expect sales to have fallen by 0.3%, which could place the Pound under pressure.
Attention will then turn to the UK’s latest PMI surveys, with the services index expected to be the key focus for Sterling investors. Any improvement in business activity during July could help support the Pound.
Meanwhile, the US S&P Global PMI surveys will be released later in the day. While typically less influential than the ISM reports, stronger-than-expected readings could still provide the US Dollar with additional support.
