Pound/dollar exchange rate falls a cent

This morning sees the pound trading around a cent lower against the U.S dollar, with the currency pair falling from yesterday's high of $1.2581 to $1.2484.

 

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The pound has lost ground despite better than expected economic data from the UK. Figurers produced by the Office for National Statistics (ONS) showed Britain's manufacturing sector grew at a faster pace than had been predicted, with output rising 2.1% against the forecast level of 0.3%.

The data shows the UK economy is continuing to defy economists' predictions the country would suffer a downturn following June's Brexit vote, and there was further good news as a separate ONS release showed the UK's trade deficit had narrowed in December.

GBP/USD graph

 

Why has the GBP/USD cross fallen?

The drop is down to dollar strength rather than sterling weakness. The U.S. dollar has been falling since the turn of the year, as President Tump focused on existing trade policies, however that changed last night after Trump promised to announce a major tax reform within the next couple of weeks.

Trump stated he plans to introduce a "phenomenal" new tax plan, the most aggressive since the era of Reagan. His comments has helped calm investors' fears that have influenced that value of the dollar in recent weeks.  

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