Pound US Dollar Exchange Rate Flat as Markets await BoE Bailey Grilling
The Pound US Dollar (GBP/USD) exchange rate is trapped in a narrow range this morning, amid a focus on Bank of England (BoE) Governor Andrew Bailey’s appearance before the UK’s Treasury committee.
At the time of writing the GBP/USD exchange rate is trading at around $1.2297, Virtually unchanged from this morning’s opening levels.
Pound (GBP) Muted ahead of BoE Bailey Testimony
The Pound (GBP) is subdued this morning as markets brace for Andrew Bailey’s testimony in front of the Treasury committee.
The Governor of the BoE and other officials from the bank will be quizzed on the collapse of Silicon Valley Bank UK.
The Committee is also likely to discuss wider stresses in the banking sector and the potential impact this may have on UK monetary policy.
If Bailey reiterates the UK’s banking system’s resilience and its ‘robust capital and liquidity positions’ the Pound could firm.
Speaking yesterday Bailey struck a broadly hawkish tone regarding monetary policy, stating:
‘[The BoE] is very alert to any signs of persistent inflationary pressures. ‘If they become evident, further monetary tightening would be required.’
A similarly hawkish tone could reflect positively on the Pound US Dollar exchange rate this morning.
US Dollar (USD) Undermined by Sanguine Market Mood
The US Dollar (USD) remains on the back foot this morning as demand for the safe-haven currency continues to be buffeted by a risk-on impulse.
Market sentiment continues to improve this morning amid easing fears over the global banking sector. Equity markets rallied on Monday as cooler heads prevailed, following Friday’s panic-driven selloff.
Michael Hewson, Chief Markey Analyst at CMC Markets, comments:
‘Most sectors of the markets have seen a modest rebound… as markets price out some of the more dire recession scenarios that were being priced at the end of last week, as markets take a breather in the wake of the turmoil seen at the end of last week.’
While the stabilisation of the banking sector potentially gives the Federal Reserve more room to raise interest rates, this has so far failed to translate into support for the US Dollar.
A modest rise in US Treasury yields is also unable to provide much lift for USD exchange rates this morning.
Pound US Dollar Exchange Rate Forecast: Slide in US Consumer Confidence to Weaken USD?
Still to come today is the publication of the latest US consumer confidence figures. The Pound US Dollar exchange rate could push higher on the back of March’s release.
Economists forecast the Conference Board’s (CB) latest consumer confidence index will report another deterioration in sentiment. Potentially pulling USD exchange rates lower this afternoon.
The latest UK consumer credit and mortgage figures, meanwhile, could buoy the Pound in mid-week trade.
The BoE’s latest consumer credit figures are expected to report borrowing fell last month, after soaring in January. Potentially a sign that cost of living pressures are easing.
At the same time, mortgage approvals are expected to have risen in February. Ending five months of consecutive declines and indicating UK economic activity is improving.