Sterling is currently at around $1.337 against the US dollar, down around 0.41 per cent from its starting levels of $1.342.
Sterling climbed back from a two-week low yesterday morning on rising Brexit optimism following suggestions that “considerable progress” had been made in the latest round of talks
However, the pound was unable to hold on to these gains as the final release of the UK’s second quarter GDP figures saw annual growth revised down from previous estimates of 1.7 per cent to just 1.5 per cent, the British economy’s slowest rate of growth since 2013.
Sterling sentiment was further weakened by suggestions that the UK’s all important service sector performed poorly in July, with the Office for National Statistics’ (ONS) accompanying “Index of Services” declining by 0.2 per cent.
The ONS suggested that the a reduced footfall in cinemas was largely to blame for July’s downturn, with the corresponding slowdown in the motion picture industry contributing a decline of 0.19 percentage points to the index.
The drop in GDP was even substantial enough for markets to overlook comments by Bank of England (BoE) Governor Mark Carney earlier this morning which suggested the timeframe for an upcoming rate hike was “in the relative near-term”.
Meanwhile, a slight revision to the latest US GDP figures helped the US dollar slow the pound’s advance yesterday afternoon as the US Commerce Department reported that the domestic economy expanded 3.1 per cent in the second quarter, up from previous estimates of 3 per cent.
The result means that growth in also currently just ahead of President Trump’s target rate of 3 per cent growth for the year, although analysts remain sceptical of whether growth will remain robust in the third and fourth quarters.
Looking ahead, the GBP/USD exchange rate may begin to slide again at the start of next week’s session with the publication of the UK’s latest manufacturing PMI, with some analysts forecasting that factory activity will have slipped in September, although an unexpected uptick could see Sterling start the week on stronger footing.
Meanwhile, investors will be watching out for a speech by Patrick Harker later this afternoon, with the US dollar possibly strengthening if the President of the Federal Reserve Bank of Philadelphia hints that he still supports a third rate hike this year.