Pound US dollar exchange rate: GBP flat as North Korea accuses US of hostility

Independence Day in the US and a lack of UK economic data created a quiet day for markets and the pairing was left flat on Thursday. However, tensions rose as North Korea’s tone shifted just days after the leaders of the US and North Korea held a historic meeting in the DMZ. US President Donald Trump became the first sitting US President to enter North Korea, with Mr Trump calling it a “great day for the world”. However, On Wednesday the regime has accused the United States of being “hell-bent on hostile acts” and “obsessed with sanctions”. 

Pyongyang has also accused Washington of attempting to “undermine the peaceful atmosphere” on the Korean peninsula. There are concerns that this change of stance may undermine the US and North Korea’s agreement to resume nuclear talks.

The US dollar also fluctuated on Wednesday following the release of mixed data. 

The US services PMI revealed that there was subdued growth in the US services sector in June, with the index coming in at 51.5 in June, up from May’s 39-month low of 50.9.

However, dollar sentiment was dampened as business confidence fell to a three-year low.

Optimism slumped due to concerns surrounding the strength of new order growth and greater competition. 

Chief Business Economist at IHS Markit, Chris Williamson, said: “Trade wars and geopolitical concerns topped the list of companies’ worries about the year ahead, alongside forecasts of slower economic growth. Progress in US-China trade talks could therefore be key to helping lift confidence in coming months.”

Meanwhile, Sterling remained under pressure as Brexit uncertainty battered the UK private sector, causing the UK All Sector Output PMI to slide to 49.2 in June. 

This was the first time the index has fallen into contraction since 2016, and the prospect of the UK entering recession weighed on the pound.

Looking ahead to Friday the dollar could rise against Sterling following the release of the US non-farm payrolls data.

The “Greenback” could be provided with an upswing of support if it is revealed that payrolls jumped by more-than-forecast in June or average earnings increased. 

source: express.co.uk