Pound US Dollar (GBP/USD) Exchange Rate Treading Water amid Looming Data Releases
The Pound US Dollar (GBP/USD) exchange rate is rangebound this morning, as investors brace for key US data due out later today.
At the time of writing the GBP/USD exchange rate is trading at $1.2091, down marginally from this morning’s opening rate.
US Dollar (USD) Muted as Investors Await GDP Report
The US Dollar (USD) is quiet this morning ahead of key US GDP data, due out this afternoon.
With GDP forecast to have accelerated rapidly in the third quarter, pointing to a resilient US economy, it could have a significant impact on Federal Reserve interest rate expectations.
The ‘Greenback’ remains subdued in the interim with seemingly hesitant investors holding steady ahead of potential market volatility and rate hike bet fluctuations this afternoon.
In addition, Fed Chair Jerome Powell did not comment on changes to monetary policy or US economic outlook in his speech last night as policymakers await further data for US inflation and economic growth. This is adding to USD’s muted movement.
Pound (GBP) Slips as UK Economic Gloom Persists
The Pound (GBP) has drifted lower this morning as cautious trade permeates the global market.
With UK data thin on the ground this week, GBP remains vulnerable to risk appetite. As geopolitical tensions rise in the Middle East, the increasingly risk-sensitive Pound faces heavy selling pressure as investors opt for safer currencies, pushing the Pound US Dollar exchange rate to a three-week low in recent days.
The Pound also remains vulnerable to an increasingly bleak UK economic outlook, fuelled by disappointing data releases earlier in the week. Signs of a slowing UK economy continue to undercut Bank of England (BoE) rate hike bets, underpinning expectations of a rate hold in November’s upcoming meeting.
With investors and analysists alike expecting a rate hold, Thomas Pugh, an economist at RSM, commented:
‘We doubt that the new statistics will prompt the [BoE] to resume its tightening cycle at its meeting next month’.
Pound US Dollar Exchange Rate Forecast: US GDP Data to Boost the US Dollar?
Looking ahead, the release of the US GDP figures later today could significantly bolster the ‘Greenback’. Economic growth in the third quarter is forecast to reach 4.3%, up from the second quarter’s 2.1%. Such a boost would show an increasingly resilient US economy, which could potentially boost Fed rate hike bets.
Also in the US, initial jobless claims for the week ending 21 October are due out. The number of Americans filing for unemployment benefits is expected to have risen by roughly ten thousand across that period. An uptick in unemployment could spark concerns of a loosening US labour market and could potentially marginally temper the US Dollar’s post GDP gains.
Looking to the UK, Sir Jon Cunliffe, BoE Deputy Governor, is due to speak later today. Investors may look to Cunliffe for an indication of the central bank’s movements at their next monetary policy meeting. If Cunliffe adopts a dovish tone in his speech, GBP could continue to stumble.