Pound US Dollar (GBP/USD) Exchange Rate Trends Sideways Despite Surprise Jobless Claims Fall
(Updated 16:32 19/01/23)
The Pound US Dollar (GBP/USD) exchange rate ticked continued to trade in a narrow range over the course of today. The pairing potentially saw its losses limited by persistent bets on softer interest rate hikes from the Federal Reserve. A stronger Euro (EUR) also sapped some demand for the US Dollar which may have kept the exchange rate from falling further.
On the other hand, an unexpected fall in US jobless claims may have capped any gains for GBP/USD. The figures pointed to a still-tight labour market in the US.
At time of writing the GBP/USD exchange rate is at around $1.2363, which is virtually unchanged from this morning’s opening figures.
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Pound US Dollar (GBP/USD) Exchange Rate Trends Sideways amid Risk-Off Impulse
The Pound US Dollar (GBP/USD) exchange rate is trading within a narrow range today. The pairing could be seeing upward momentum capped by a cautious market mood, as well as Federal Reserve rate hike bets.
On the other hand, GBP/USD may be seeing its losses limited by cautious Fed rhetoric and Bank of England (BoE) rate hike bets.
At time of writing the GBP/USD exchange rate is at around $1.2333, virtually unchanged from this morning’s opening figures.
US Dollar (USD) Bolstered by Fed Rate Hike Bets, Cautious Rhetoric Sees Limited Bets Against GBP
The US Dollar (USD) is firming today. The safe-haven ‘Greenback’ may be benefitting from a pullback in risk appetite. A downturn in Treasury bond yields may keeping USD in a narrow range against Sterling, however,
USD may also be finding support from persistently hawkish signals from Federal Reserve officials today. Markets are continuing to price in further rate hikes from the Fed at the central bank’s next meeting.
Speaking at a Wall Street Journal event on Wednesday, St. Louis Fed President James Bullard signalled his desire for further rate hikes to battle soaring inflation.
Fed-motivated gains for USD could be limited by more cautious signals from other Fed board members, however. Also on Wednesday, Philadelphia Federal Reserve President Patrick Harker signalled that he saw 25bps rate hikes as ‘appropriate going forward’.
Pound (GBP) Gains Against Riskier Peers amid Cautious Mood, Trades Narrowly Against USD
The Pound (GBP) is slipping against its safer rivals today. A cautious market mood may be weighing on Sterling, although rate hike bets may be limiting its losses against USD.
GBP may also be seeing losses from the prospect of fresh widespread strike action. Wednesday saw nurses across England strike in protest over low pay and poor work conditions. Additionally, ambulance workers announced another four strike dates across February and March today.
Sterling may be seeing more dramatic losses limited by Bank of England (BoE) rate hike bets, however. Data releases this week indicated persistently strong wage growth, as well as stubbornly high core inflation. Markets saw the data as cause for a 50bps rate hike from the central bank at their next meeting.
GBP/USD Exchange Rate Forecast: Will UK Retail Recovery Provide Boost to Pound?
Looking ahead to the remainder of the week for the Pound, retail sales figures on Friday could provide a boost to Sterling if they print as forecast. The expected rise in December’s figures will come after positive profit reports from major UK retailers over the festive period.
With no other major data releases this week, the Pound could see headwinds from domestic headlines. Further strikes from health sector workers could weigh on Sterling over the coming week. Additionally, the upcoming vote on the UK’s ‘anti-strike’ legislation may cause movement in the currency.
For the US Dollar, jobless claims figures later today could see gains for USD if they print as forecast. The latest weekly claims are expected to remain close to previous lows. Investors may view the data as a sign of a tight labour market.
Speeches from several Fed policymakers over today and Friday could also bolster the US Dollar. Despite cooler US inflation figures last week, Fed board members have remained adamant that further rate hikes will be necessary.