Pound US Dollar (GBP/USD) Exchange Rate Subdued in Absence of Data
The Pound US Dollar (GBP/USD) exchange rate is trading narrowly today, as a lack of data leaves the pair without much impetus.
At the time of writing the GBP/USD exchange rate is trading at around $1.2152, which is virtually unchanged from this morning’s opening rate.
Pound (GBP) Muted by Gloomy Economic Outlook
The Pound (GBP) is trading narrowly against many of its peers this morning amid a lack of data.
This is causing investors to reflect on the UK’s gloomy economic outlook. The UK consumer has found their spending power greatly reduced amid rising inflation. The lag in real wages is hitting workers and businesses alike.
More businesses are reporting dropping sales in the wake of further industrial action. Moonpig shareholders have reportedly cited mail strikes and macroeconomic uncertainty as the reason for their declining sales.
Many businesses have been hopeful that a pre-Christmas boost might help their falling sales figures. However, as food and electricity bills continue to climb consumers are cutting back on Christmas luxuries. As a result, many expect business activity to keep declining into the new year, when many businesses will likely experience a post-holiday slump.
This poor outlook for the UK economy is keeping the Pound subdued this morning.
US Dollar (USD) Mixed as Market Sentiment Begins to Sour
The US Dollar (USD) is struggling for a clear direction today. A lukewarm market mood preventing an upside.
This follows China printing its balance of trade report overnight. According to the figures the country’s trade surplus dropped to $69.84 billion in November, far below the expected $78.1 billion.
Whilst analysts had expected the surplus to shrink, the bigger-than-expected slump still surprised markets. This news from China is keeping USD’s downside limited this morning.
However, a lack of significant data means that the ‘Greenback’ is struggling to advance. This data scarcity means investors are focusing on the strength of the US economy. Recent positive data has muddied expectations of a smaller interest rate rise from the Federal Reserve next week. This uncertainty is keeping the US Dollar sluggish against the Pound.
Pound US Dollar Exchange Rate Forecast: Risk Sentiment to Drive USD?
Looking ahead, the Pound US Dollar exchange rate could be driven by market sentiment.
Whilst the US does have data due tomorrow, it will likely be more impacted by market mood. Any news from China regarding easing Covid restriction could weigh on USD.
Turning to data, initial jobless claims for the week of 3 December are expected to edge up but remain at lower levels. Any unexpectedly large rise or fall could dent or support the US Dollar, respectively.
A continued lack of UK data will likely see GBP trade on domestic headlines again. Continued concern about the country’s economic state will likely pressure the Pound.