Pound to US Dollar Exchange Rate Slides Back as UK Growth Fears Cloud Outlook
Earlier in the week, the Pound Sterling to US Dollar (GBP/USD) exchange rate surged. However, as UK economic concerns worsen and this week’s coronavirus vaccine hopes soften, the pair is quickly shedding some of those impressive gains.
Since opening this week at the level of 1.3145, GBP/USD has been trending with an upside bias. Yesterday, GBP/USD even touched on a high of 1.3292 – the best level for the pair in two months. After touching that high, GBP/USD fell back and has been sliding. At the time of writing on Thursday, GBP/USD trends near the level of 1.3195. This leaves the pair closer to the week’s opening levels again.
Rather than boosting optimism for a UK economic recovery, today’s UK growth results made markets more concerned about Britain’s outlook. Coronavirus jitters persist around the globe, keeping safe havens like the US Dollar (USD) relatively appealing. The UK economy grew at a record quarterly rate in Q3, as it tried to rebound from the first coronavirus lockdown amid easing restrictions.
However, Britain’s growth rate slowed notably in September, and analysts believe there will be more weakness ahead for Britain’s economy.
It comes as this morning’s UK Gross Domestic Product (GDP) growth rate report fails to meet forecasts. Quarterly growth came in at 15.5% rather than the expected 15.8%, and the yearly growth rate contracted at –9.6% – more than expected.