Pound US Dollar Exchange Rate Rises amid Risk-On Sentiment
The Pound US Dollar (GBP/USD) exchange rate is extending its upside after peace talks concluded in Turkey, bringing us one step closer to the possibility of a diplomatic end to the Ukraine-Russia conflict. In turn, such moves are stifling the appeal of the safe-haven ‘Greenback’.
At time of writing the GBP/USD exchange rate is around $1.31361, a modest rise from this morning.
Pound (GBP) Bolstered as Optimism around Ukraine Peace Talks Lifts Market Mood
The Pound (GBP) is rallying against the US Dollar after the conclusion of peace talks between Ukraine and Russia proved more fruitful than previous attempts. Russia has promised to scale down operations around Kyiv and the northern cities as Ukraine has cooled talks of joining NATO in order to maintain a neutral status.
Ukrainian presidential advisor Mykhailo Podolyak said; “Talks [are] successful enough for a possible meeting between Putin and Zelensky, we have documents prepared now which allow the presidents to meet on a bilateral basis.”
While dovish comments from the Bank of England (BoE) have dampened moods as of late,
In a speech delivered today, Deputy Governor of the Bank of England Ben Broadbent said of the situation: “There are lots of unpredictable shocks hitting the economy, things that would otherwise (and often do) move output and inflation around, the appropriate path of interest rates is necessarily unpredictable as well,”
On the other hand, the cooling of tensions in Ukraine could bolster hopes the BoE will deliver another rate hike in May.
A negotiated end to the conflict could also help to ease inflationary pressures in the UK reducing concerns over the cost-of-living crisis which has weighed heavily on the Pound in recent weeks.
US Dollar (USD) Struggles as Appeal Drops for Safe-Haven Currencies
The US Dollar (USD) saw a downturn as market risk appetite has been bolstered by progression of peace talks between Russia and Ukraine. Risk-sensitive currencies such as the Pound have been under pressure from the ‘Greenback’ amid the ongoing Ukraine crisis affecting market uncertainty.
Meanwhile, the US Dollar’s losses may have been extended this afternoon after the latest US GDP figures printed slightly below expectations, with growth in the fourth quarter climbing from 2.3% to 6.9% versus the 7.1% forecast.
Pound US Dollar Forecast: US Data to Subdue Buoyant Cable?
Looking ahead, with no major GBP data out until Friday, the ‘greenback’ could make up lost ground on Sterling as several key data sets are to be published this week.
Non-Farm Payrolls is released on Friday with market forecasts showing that the US economy has added 475,000 new jobs in the month of March. Focus will be on the NFP as a good indicator to gauge the Fed’s monetary policy moving forward.
In the meantime, the Pound could struggle in finding support outside the Ukraine-Russia optimism, until a potential rise to GDP growth on Friday could further influence the cable.