Pound US Dollar Exchange Rate Falls in Bearish Trade
The Pound US Dollar (GBP/USD) exchange rate is falling this morning, amid a prevailing risk-off mood.
At the time of writing the GBP/USD exchange rate is trading at around $1.1422, which is down roughly 0.3% from this morning’s opening rate.
US Dollar (USD) Rebounds as Market Mood Sours
The US Dollar (USD) is firming amongst most of its peers today as a tepid market mood sees investors favour the safe-haven ‘Greenback’.
This is being partly attributed to aggressive Federal Reserve rate hike bets. The Fed is forecast to deliver another 75bps hike in November.
Analysts fear Fed’s aggressive hikes could undercut US economic growth and increase the risks of global recession.
Edward Yardeni, president and chief investment strategist of Yardeni Research spoke out. He said that the Fed should pursue this final aggressive hike in November, then slow down:
‘I think they have one more rate hike coming in November and that will be it because the financial stability issue will pop up as a primary concern’.
Despite calls for central banks to slow down their monetary tightening to ease global recession fears, USD is firming today.
Pound (GBP) Falls as GBP Investors Turn to Domestic Headlines
The Pound (GBP) is slipping against most of its peers this morning as GBP investors remain sensitive to domestic headlines in the wake of fiscal plan confusion.
The Treasury confirmed yesterday that the mid-term fiscal budget forecast would be released early following some confusion after Chancellor Kwasi Kwarteng suggested it was still scheduled for the original date.
Investors are keen for the forecast as it with outline how the growth plan will underpin the UK economy.
Today, news on the mini budget is thin on the ground, which has investors focusing on bleak headlines.
Rail strikes are pressuring the Pound this morning, as workers continue to advocate for better pay to off set the increased cost of living.
Aslef general secretary Mick Whelan has said the industrial action will continue until the government intervenes:
‘The message I am receiving from my members is that they are in this for the long haul and if anything they want industrial action to be increased’.
Pound US Dollar Forecast: Truss Speech to Sink Pound Further?
Looking ahead, movement in the Pound US Dollar exchange rate could be tied to Liz Truss’s speech later today.
The Prime Minister will speak at the Conservative Party conference later today. Any indication to changes in the mini budget could shore up the Pound. However, if she continues to defend the budget, then Sterling could face further headwinds.
For the US Dollar, the US ISM services PMI is in focus today. The data is expected to print a drop from 56.9 to 56. Could a stronger-than-expected result bolster USD further? Or could a missed forecast see the currency shed its gains?