Pound US Dollar Exchange Rate Wavers as Investors Brace for Headline Speech
The Pound US Dollar (GBP/USD) exchange rate is trading narrowly as the market awaits a speech from Federal Reserve Jerome Powell amid turbulent economic concerns.
At time of writing the GBP/USD exchange rate is trading around $1.2595, relatively unchanged from this morning’s opening levels.
US Dollar (USD) Propped up by Souring Market Mood
The US Dollar (USD) is fairly lacklustre this morning amid a lack of economic data. With uncertainty surrounding global economic conditions, safe-haven flows are providing the ‘Greenback’ with moderate support.
USD investors have started to move to the wings ahead of the Jackson Hole Symposium that kicks off today. With Federal Reserve Chair Jerome Powell set to be the headliner, the market will be closely watching his performance. A hawkish tilt could split the crowd, with USD investors likely to cheer further tightening. However, risk sentiment could then take a hit on global growth concerns.
If Powell was to confirm the central bank will leave interest rates unchanged at the September meeting, risk appetite could return. Also, if he talks about rates are likely to peak soon and if so, when cuts will start. Adam Posen, former member of the Bank of England’s (BoE)Monetary Policy Committee, said of the upcoming speech:
‘I think Powell’s main effort is going to be explaining to what degree you want to hold (interest rates) higher for longer in the current outlook.’
Pound (GBP) Undermined by Mounting Economic Woes
Meanwhile, the Pound (GBP) is struggling to find a clear direction as a whirlwind of economic woes is keeping it downtrodden.
This morning saw the release of the latest consumer confidence indicator from Gfk. Despite sentiment rising in August, reversing July’s huge decline, consumer confidence remains low. Joe Staton, Client Strategy Director at GfK said of the latest data:
‘Consumer confidence regained momentum this month with a welcome five-point improvement. While the financial pulse of the nation is still weak, these signs of optimism are welcome during this challenging time for consumers across the UK.’
Pound US Dollar Forecast: Hawkish Powell to Rally the Greenback?
Looking ahead to today and over the weekend, the Pound US Dollar exchange rate could see major movements. The speech from Powell could send shockwaves through the markets on his comments.
Meanwhile, Sterling will be left to trade on market sentiment as investors mull over the fragility of the UK economy until next week.