Pound US Dollar (GBP/USD) Exchange Rate Firms on UK GDP Upside Surprise
(Article updated 09:10, 10/3/2023) The Pound US Dollar (GBP/USD) exchange rate is firming this morning, amid a better-than-expected GDP reading.
The UK’s GDP data for January printed at 0.3%, beyond the expected 0.1% growth. Because of this, GBP investors are cheering that the UK could be able to avoid a technical recession.
However, anticipation over this afternoon’s US non farm payrolls data is likely capping Cable’s gains.
At the time of writing, GBP/USD is trading around US$1.11950, a rise of roughly 0.2% from the morning’s opening rates.
Original article continues below:
Pound US Dollar (GBP/USD) Exchange Rate Rallies as Investors Buy the Dip
(Article updated 16:33, 9/3/2023) The Pound US Dollar exchange rate is rallying this afternoon, as investors move to grab a bargain.
Following the latest US Jobless claims, which showed an above forecast increase, USD investors are engaging in profit-taking.
As such, other currencies such as Sterling are now finding their feet. With the Pound recently falling sharply against the US Dollar, investors may be dip-buying, resulting in the current strength.
At the time of writing, GBP/USD is trading around US$1.1923, a rise of around 0.6% from today’s morning rates.
Original article continues below:
Pound US Dollar (GBP/USD) Exchange Rate Ticks Up amid Upbeat Market Mood
The Pound US Dollar exchange rate is firming this morning, as the upbeat market mood lifts the more risk-sensitive GBP.
At the time of writing, GBP/USD is trading around US$1.1875, an increase of roughly 0.2% from the morning’s opening rates.
Pound (GBP) Edges Higher on Upbeat Trade
The Pound (GBP) is posting modest gains this morning, due to an upbeat market mood. Due to Sterling’s increasingly risk-sensitive nature, the Pound is notching higher against safer assets such as the US Dollar.
However, GBP could be limited by the perceived divide between the Bank of England’s (BoE) monetary policy against other central banks.
Earlier this week, BoE policymaker Catherine Mann suggested that GBP risked coming under pressure from hawkish policies overseas. With this in mind, the divergence between the fully priced in 25bps rate hike from the BoE could be weighing on GBP.
Both the Federal Reserve and European Central Bank (ECB) are forecast to post 50bps hikes. Because of the dovish appearance of the BoE, sentiment towards Sterling may be on the wane.
US Dollar (USD) Underpinned by Elevated Rate Hike Bets
The US Dollar (USD) is struggling for support this morning, as markets appear to be favouring riskier investments.
However, the ‘Greenback’ is likely being underpinned by renewed Federal Reserve rate hike bets. Following Fed Chair Jerome Powell’s testimonies to the US Congress, USD investors are expecting further hawkish hikes.
Markets have begun to price in a 50bps rate hike during March’s meeting, with recent labour data reinforcing this.
Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING, explained:
‘The dollar is consolidating near recent highs and one can see why. Hawkish testimony this week from Fed Chair Jerome Powell has seen market pricing of the terminal Fed rate push up to 5.65% for a peak in September.’
However, investors may be mindful of today’s US Budget. US President Joe Biden is expected to detail roughly $3 Trillion in deficit reduction measures. However, the Republican controlled senate is likely to play hardball, with resulting political gridlock potentially weighing on USD.
Pound US Dollar (GBP/USD) Exchange Rate Forecast: UK GDP to Boost GBP?
Looking ahead for the Pound, tomorrow’s GDP data is likely to be the core catalyst of movement. January’s monthly data is forecast to show growth of 0.1%, which could bring strength to Sterling by easing recession anxieties.
However, ever-present domestic headwinds may cap potential gains for the Pound. The cost-of-living crisis remains a pressure on UK households, and further headlines could add a sting to the GDP recovery.
For the US Dollar, the latest non farm payrolls data is due to print tomorrow. While a substantial decline from January’s surprise release is forecast, the figures are expected to print at 205,000.
If this prints as expected, the US labour market is likely to remain tight, adding further fuel to Federal Reserve rate hike bets. As such, the ‘Greenback’ may rally significantly.