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ExchangeRates.org.uk - Turning to this week, there are several high-profile US data releases set to influence the Pound US Dollar exchange rate, the most impactful of which will likely be the latest US non-farm payroll figures.Consensus estimates predict that payroll numbers will have fallen off again in May.
The cooling of the US labour market will likely drag on USD exchange rates as it raises fresh concerns over a potential recession as well as placing more pressure on the Fed to ease its monetary policy.
The latest ISM PMIs could have a similar impact on the ‘Greenback’ if they point to weakness in the US private sector.
In the meantime, the Pound may remain adrift next week in the absence of any notable UK economic releases.
WEEKLY RECAP:
The Pound US Dollar (GBP/USD) exchange rate traded erratically last week amid the uncertainty surrounding a legal challenge to US President Donald Trump’s tariffs.
The GBP/USD exchange rate closed last week trading at around $1.3493.
Down roughly 0.3% from the session’s opening levels.
The US Dollar (USD) opened last week on the back foot as US markets closed for the long Memorial Day weekend, but quickly bounced back on Tuesday, as USD investors responded to the news that US President Donald Trump has suspended his proposed 50% tariffs on the EU.
The US dollar then built on these gains in mid-week trade, following a court ruling which determined that Trump had exceeded his authority under the International Emergency Economic Powers Act by imposing sweeping tariffs on numerous countries.
However, the upside in USD was short-lived as on Thursday, a federal appeals court temporarily reinstated the contested tariffs, introducing renewed uncertainty into the market.
This pressure was compounded by US data reporting a surprise slump in corporate profits and larger-than-expected rise in jobless claims.
Closing out the week was the release of the Federal Reserve’s preferred indicator for inflation, the core PCE price index.
This further limited the appeal of the US dollar after a cooling of inflation stoked Fed interest rate cut speculation.
The Pound (GBP) drifted without clear direction for much of last week, as quiet trading conditions and a lack of fresh UK economic data offered little for investors to act on.
Sterling saw a modest mid-week lift after the International Monetary Fund (IMF) nudged its 2025 growth projection for the UK up from 1.1% to 1.2%.
The revision followed stronger-than-expected growth in the first quarter and signs of broader economic recovery.
The IMF also highlighted the UK’s recent international trade progress, citing agreements with the EU, India, and the US as factors supporting the improved outlook.
Despite this positive development, the Pound’s gains were fleeting.
With no new domestic data to provide further support, GBP came under pressure again later in the week, with some investors opting to lock in profits and step back from the currency.
This content was originally published on ExchangeRates.org.uk