GBP/USD was able to creep higher despite the UK’s preliminary growth report for the final quarter of 2019 confirming that the economy stagnated at the start of the year.
Seamus Nevin, Chief Economist at the manufacturer’s trade group, Make UK, commented: “The extent of political and economic uncertainty towards the end of last year has been laid bare with the economy spluttering to a halt.”
“Business confidence in industry remains fragile with concerns about our future trade rules meaning that the taps of investment are unlikely to be turned on anytime soon.”
There was a slight upside to the data however, with the year-on-year growth reading being positively revised to 1.1%.
Other UK data showed an unexpected increase in construction output but a disappointing level of industrial and manufacturing output.
The US dollar, meanwhile, continues to benefit from its safe-haven status as markets shy away from risk-correlated currencies amid China’s coronavirus outbreak.
However, Jerome Powell, the Chair of the Federal Reserve, warned that the coronavirus could eventually have a negative effect on the American economy, commenting: “We [the Federal Reserve] are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy.”
That being said, Powell did assert that the US economy remained “resilient” amid a possible global economic slowdown.
Looking ahead to tomorrow, we could see GBP/USD exchange rate dip if the UK’s autumn spending review from the HM Treasury is notably downbeat about the future of the British economy post-Brexit.