Pound US Dollar (GBP/USD) Exchange Rate Flat amid Quiet Trading Session
The Pound US Dollar (GBP/USD) exchange rate is narrowing this morning, as Sterling looks to consolidate its post-PMI gains.
At the time of writing, GBP/USD is trading at roughly US$1.2547, showing little movement from the morning’s opening rates.
Pound (GBP) Sideways as GBP Consolidates Gains
The Pound (GBP) is trading sideways this morning, as a light data calendar keeps the focus on Bank of England (BoE) interest rate bets.
Markets have begun to anticipate cuts from the BoE sooner rather than later, as inflation has begun to cool significantly.
Pushback from BoE rate setters appears to have been less than convincing to markets as well. This morning, BoE Chief Economist Huw Pill outlined that the bank cannot ‘declare victory and move on’, stating:
‘There’s slower growth in activity and employment as we’ve discussed. But because I think that is more supply-driven rather than demand-driven, the weakening of activity is not as associated with easing of inflationary pressures.’
However, the lack of impactful macroeconomic data could be serving to limit the impact of Pill’s remarks. While they emphatically go against imminent rate cuts, they appear to be doing little for GBP as it remains floundering.
Elsewhere, the Pound could be consolidating its gains from yesterday’s robust flash PMIs. The UK’s private sector is in better shape than expected, with the service sector in particular returning to growth.
Similarly, analysis revealed that inflationary pressures were increasing in the private sector, which could be underpinning Sterling.
US Dollar (USD) Static Ahead of US Flash PMIs
The US Dollar (USD) is remaining quiet this morning, as investors look ahead to the afternoon’s flash PMI releases.
Economists forecast that both manufacturing and service sectors will have slowed in November. Activity in the US manufacturing sector is expected to have slipped into contractionary territory, with an index of 49.8 expected.
If accurate, this could weigh on the US Dollar later in the afternoon amid signs of economic weakness. However, this could be offset by the key services sector remaining in growth territory.
Elsewhere, US markets are due to have a half day of trade, which may bring thin trading conditions. As such, the ‘Greenback’ could remain unable to gain ground against its peers if upbeat trade continues.
Francesco Pesole, FX Strategist at ING, commented:
‘The quieter US calendar has seen market focus being re-directed, namely on oil market developments, a ceasefire in the Israel-Hamas conflict and Chinese real estate news.’
Pound US Dollar Exchange Rate Forecast: UK Retail Data in Focus
Looking ahead for the Pound, the core catalyst of movement may be the latest distributive trades data from the Confederation of British Industry (CBI).
Due to print Monday, these reflect November’s retail sales. Following consistently poor data from the UK’s retail sector, these may come in below forecasts which could weigh on Sterling.
For the US Dollar, data releases are thin on the ground at the start of next week’s session. Because of this, the ‘Greenback’ may struggle to attract support if the recent risk-on impulse continues.
However, if the week kicks off on a bearish note, the safe-haven US Dollar could gain ground against the riskier Pound.