Pound v US dollar: GBP slips against USD amid North Korean tensions

THE pound slipped from its best levels against the US dollar yesterday afternoon as markets began to recover from the shock of yesterday’s North Korean missile test over Japan.

Theresa May: China must put pressure on North Korea

is currently at $1.291 against the dollar, down -0.1 per cent from its opening levels and well below yesterday’s high of $1.297.

, the US dollar was able to recoup its losses by the late afternoon as investors became a little more sanguine over the situation, with many expressing doubts that events will escalate much further.

Michael Hewson, chief market analyst at CMC Markets UK, said: “It is true that flare ups on the Korean peninsula are nothing new and previous instances have always resulted in a winding back of tension, and it would appear that US investors have decided that recent events are likely to go the same way.”

Pound Sterling and US dollarsGETTY

Pound slipped from its best levels against the US dollar amid North Korean tensions

However analysts also warned that the events of the last few weeks suggest that tensions may still be running hot and that the US may take a more hard line stance against Pyongyang if it continues its provocative actions, with Hewson adding, “markets could be being rather naïve that current events can be contained”.

Previous instances have always resulted in a winding back of tension

Michael Hewson - CMC Markets UK chief market analyst

Meanwhile sterling began to claw its way higher again this morning with the release of the UK’s latest home loan figures.

According to data published by the Bank of England (BoE), mortgage approvals surged from 65,318 to 68,689 in July, coming in well above expectations of a rise to 65,500.

However a little more disappointing were the accompanying consumer credit statistics which fell behind forecasts, slipping from £1.351bn to £1.179bn over the same period.

Kim Jong-unGETTY

Global markets have reacted to North Korea's missile test over Japan

GBP is currently at $1.291 against the USDGETTY

Sterling is currently at $1.291 against the US dollar

Looking ahead the GBP/USD exchange rate is likely to slide again this afternoon with the release of the latest US GDP estimate as economists forecast that the US economy will have grown 2.7 per cent in the second quarter, up from the previous estimate of 2.6 per cent.

However the US dollar may come under some pressure today as President Trump gives a speech detailing his long-awaited tax reforms, with many investors doubting he has enough political capital to push his reforms through Congress after his administration’s repeated failures to implement healthcare changes.

Meanwhile the pound may tumble again tomorrow as analysts predict that UK consumer confidence will have slipped again in August with the confidence index expected to have fallen from -12 to -13.

Would you like to receive news notifications from Daily Express?