Pound US Dollar (GBP/USD) Exchange Rate Regains some Lost Ground after US PMI Data
(Updated 16:49 16/12/22)
The Pound US Dollar (GBP/USD) exchange rate regained some lost ground over the course of the day. The pair remained in negative territory, however. An above-forecast contraction in US private sectors may have helped the pair to tick higher.
December’s PMI figures fell by more-than-forecast today across all private sectors. The data added to fears that the US may be facing an imminent recession and that further rate hikes from the Federal Reserve could intensify the downturn.
James Knightley, Chief International Economist at ING, said:
‘This report adds to concerns that with the Fed not yet done with rate hikes, a recession has to be the base case.’
At time of writing the GBP/USD exchange rate is at around $1.2163, which is down roughly 0.2% from this morning’s opening figures.
Original article continues below:
Pound US Dollar (GBP/USD) Exchange Rate Slips after Poor UK Private Sector Data
The Pound US Dollar (GBP/USD) exchange rate is falling today. Poor private sector data releases for the UK could be pushing the currency pair lower. A risk-off market mood could also be causing GBP/USD to fall today.
At time of writing the GBP/USD exchange rate is at around $1.2137, which is down roughly 0.4% from this morning’s opening figures.
Pound (GBP) Drops as Retail Sales Print Surprise Fall
The Pound (GBP) is sliding today after disappointing data for the UK’s private sectors. November’s retail sales printed a surprise fall of -0.4% today.
Sales had been forecast to cool last month, but experts had been anticipating the World Cup and Black Friday to underpin the sector.
Reduced household spending amid the UK’s cost-of-living crisis is thought to have been a key driver of the slump.
Olivia Cross, an economist with Capital Economics, said:
‘We doubt there is a sustained recovery in retail sales volumes in the pipeline. We expect that high inflation will drive further falls in real household disposable income of 1.1% in Q4 2022, which will keep sales volumes subdued in December.’
Poor PMI figures for December may also be keeping pressure on the Pound today. The UK’s manufacturing sector contracted by more-than-forecast whilst output in the services sector stagnated. S&P Global chief business economist Chris Williamson stated that the data added ‘to the likelihood that the UK is in recession’.
US Dollar (USD) Muted amid Risk-Off Mood
The US Dollar (USD) is seeing subdued bets against most of its peers today amid a lack of significant data.
A retreat in global risk appetite is likely preventing any drastic losses for the safe-haven ‘Greenback’. The cautious market mood may also be bolstering USD against the Pound today.
USD could also be finding support from the Federal Reserve’s interest rate decision earlier this week. Whilst the Fed’s 50bps rate hike was in line with forecasts, hawkish signals from Fed Chair Jerome Powell may be seeing USD tick higher.
Reports that the US Senate has passed emergency measures to prevent a partial government shutdown could also be underpinning USD today. The senate voted 71-19 to enact a weeklong stopgap funding bill ahead of a Friday deadline.
GBP/USD Exchange Rate Forecast: Will UK Strikes Worsen UK Outlook?
With no significant data left for the Pound this week, the currency could find impetus from the markets as they continue to digest the BoE’s interest rate decision and forecast.
The coming weeks of further industrial action could weigh on the Pound. Hospitality and retail sector heads have warned of the drastic economic impact of the strikes on their sectors.
Looking to the coming week for Sterling, the final reading of GDP growth rate figures on Thursday could lend support to the currency. Third quarter figures are expected to confirm an expansion in the UK’s economy.
For the US Dollar, the latest PMI data could push the currency lower if December’s figures print as forecast. The data is expected to confirm a contraction across the country’s private sectors.
The aftershocks of the Fed’s interest rate decision could also drive movement in the US Dollar.
Next week for USD, Thursday’s GDP growth figures could weigh on the currency if the final printing confirms a third quarter contraction.
A slip in the PCE price index, the Fed’s preferred measure of inflation, on Friday could also prompt losses in the US Dollar. November’s figures are expected to slip as inflationary pressures in the US cool further.