Pound US Dollar (GBP/USD) Rangebound Ahead of US Inflation Data  

Pound US Dollar (GBP/USD) Exchange Rate Flat as Investors Await Key Data

The Pound US Dollar (GBP/USD) exchange rate is treading water today, as investors brace for vital US data releases.

At the time of writing the GBP/USD exchange rate is trading at $1.2115, virtually unchanged from this morning’s opening rate.

US Dollar (USD) Holds Steady in Anticipation of Core PCE Data

The US Dollar (USD) is quiet this morning following yesterday’s selloff ahead of the latest US inflation readings.

The ‘Greenback’ fell yesterday after strong GDP data cheered markets, thereby denting the safe-haven US Dollar. USD is lying low once again today ahead of further impactful data releases.

Eliza Winger, an economist at Bloomberg, has labelled the recent surge in US growth ‘unsustainable’, suggesting that the effects of Federal Reserve rate hikes are ‘taking time to hit the real economy’.

The Federal Reserve appears to have achieved a ‘soft landing’, cooling down inflation without triggering a recession. This has helped soothe fears of a global recession.

Today, investors seem hesitant to place any hasty bets ahead of imminent US inflation data. The Federal Reserve’s favoured measure of inflation is due out later today, with USD flat in the interim as investors brace for potential market volatility and further Fed rate hike bet fluctuations.

Pound (GBP) Muted as UK Economic Doubts Persist

The Pound (GBP) is subdued this morning amid a lack of fresh UK data, as ongoing economic concerns stifle GBP.

An influx of gloomy data readings throughout the week have curbed Bank of England (BoE) interest rate hike bets, as investors remain hesitant to support Sterling in the wake of an increasingly bleak economic outlook across the UK.

Yesterday’s distributive trades data from the Confederation of British Industry (CBI) fuelled concerns of a weakening retail sector, returning the lowest reading for October since 2017. Equally, lacklustre labour data and disappointing PMIs released earlier in the week continue to cast a sombre shadow over the Pound’s movements as the week draws to a close.

Ruth Gregory, Deputy Chief UK Economist at Capital Economics, noted that recent data suggests:

‘A mild recession is underway and the Bank of England has finished hiking interest rates’.

With no notable UK data due until next week, domestic recession anxieties remain a pertinent driving force behind Sterling.

Pound US Dollar Forecast: US Inflation to Dent the ‘Greenback’?

Looking ahead, the release of the US core PCE price index is in focus today. As the Federal Reserve’s preferred measure of inflation, a forecast cooling could see investors scale back Fed rate hike bets, potentially hurting USD later today.

Also due out today is US personal spending and personal income data for September. Both sets of data are expected to hold steady this month, though any significant deviations from anticipated figures could impact the US Dollar later on.

Looking to the UK, a lack of notable data could leave the Pound vulnerable to risk sentiment. As the Israel-Hamas conflict escalates in the Middle East, fears of regional involvement are on the rise. Anxious investors may continue opting for safe-haven currencies in favour of the increasingly risk-sensitive Pound as threats of geopolitical uncertainty loom

Yasmine Arasteh

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