Pound US Dollar Exchange Rate Wavers as Risk-Averse Market Remains Bearish
The Pound US Dollar (GBP/USD) exchange rate is trading sideways today as hawkish Fed expectations look to weigh on the cable amidst impending US job data as Ukraine-Russia fears grow.
At time of writing the GBP/USD exchange rate is around $1.31171, relatively unchanged from this morning.
US Dollar (USD) Looks to Strengthen amid Positive Data and Risk-Off Sentiments
The US Dollar (USD) saw modest gains against the Pound as escalating tensions in Ukraine provided a boost for the safe-haven currency.
Despite both Ukraine and Russia pledging to continue peace talks in the coming days, a notable lack of progress fuel geopolitical tensions, providing modest tailwinds for the ‘greenback’.
Investors were further buoyed in anticipation of key jobs data to be released today, with the US Dollar enjoying a moderate tailwind against the Pound in anticipation of positive reports.
The Non-farm Payroll data is expecting to print at an increase of 490,000 positions in March, a drop from the 678,000 recorded for February but likely still robust enough to bolster expectations for the Federal Reserve’s next interest rate hike.
Pound (GBP) Struggles to Inspire Movement After Manufacturing PMI Drop
The Pound (GBP) is trending sideways against the US Dollar today after the S&P Manufacturing PMI data showed a drop to 55.2 in March from 58 points in February. Slower-than-expected growth in the UK manufacturing sector comes as inflationary pressures strengthen amid supply shortages and the ongoing Ukraine conflict.
Rob Dobson, Director at S&P Global, commented on the outcome:
“March saw a marked growth slowdown in the UK manufacturing sector, with rates of expansion for production and new orders both easing and new export business suffering back-to-back declines. The slowdown in consumer goods output was especially marked.”
Sterling did draw some support to cap any losses after Thursday’s better-than-expected UK GDP release, showing that the economy expanded by 1.3% in the fourth quarter of 2021, beating out the estimated 1.0% rise.
With the Bank of England’s (BoE) persistent dovish tone over the need for further interest hikes, coupled with the more aggressive stance of the Fed, keeps the cable subdued.
Pound US Dollar Forecast: Will Forecasted US Data Turn Tide in Favour of the ‘Greenback’?
Looking ahead, all eyes will be on US data today, as the Non-farm Payroll and Unemployment figures are due for release today, along with ISM Manufacturing PMI. With most forecasts expecting positive results, the outcome could potentially directly influence the Fed’s monetary policy outlook going forward.
With no further UK data today, any further developments in Ukraine will weigh heavily on the cable, as the risk-averse sentiment returns with pessimism over negotiations between both Russia and Ukraine.
The risk-sensitive Pound looks to rely on support from the positive GDP data until the release of fresh PMI data next week.