Pound US Dollar (GBP/USD) Exchange Rate Muted with Data in Short Supply
The Pound US Dollar (GBP/USD) exchange rate is muted this morning amid an absence of data.
At the time of writing the GBP/USD exchange rate is trading at around $1.2634, virtually unchanged from this morning’s opening rate.
Pound (GBP) Flat amid Data Lull
The Pound (GBP) is trading without a clear direction this morning, with fresh UK data in short supply.
Investors may look to the UK’s gloomy economic outlook, as well as recent Bank of England (BoE) commentary in the meantime.
Following the Confederation of British Industry’s (CBI) monthly sales gauge, concerns of a loosening retail sector continue to undermine the Pound. Despite a slightly smaller-than-expected contraction, the CBI reported the UK retail sector suffered its seventh consecutive month of negative sales, as cost of living concerns stifle consumer spending.
Martin Sartorius, Principal Economist at the CBI, commented:
‘Retailers had hoped the chancellor’s autumn statement would offer a reprieve from next year’s hike in business rates. Many retailers are being left to contend with another increase in costs at a time when they are least able to afford them.’
However, BoE policymaker David Ramsden opted for a notably hawkish stance during a speech this morning, despite signs of a slowing economy. This offered Sterling limited support, leaving GBP to trade sideways ahead of key economic releases.
US Dollar (USD) Wavers amid Economic Uncertainty
The US Dollar (USD) is treading water this morning, as a lack of notable economic data leaves USD vulnerable to concerns of economic slowing.
Amid increasingly volatile economic reports in recent weeks, the trajectory of the US economy appears unclear. Federal Reserve commentary has been remarkably tepid as the effects of the Fed’s tightening cycle begin to be felt by the wider economy, serving to stifle rate hike bets.
Economists have expressed concerns that the discernibly robust US economy may begin to stumble in the coming months, keeping USD rangebound.
The Deutsche Bank’s 2024 World Outlook projection for the US economy and the Federal Reserve’s subsequent response reported:
‘The lag of policy will help trigger a mild US recession in H1 2024 with the upside risks being a continuation of the inflation/labour market progress made in 2023, with the downside being the non-linearity risk mentioned above. We think there will be 175bps of Fed cuts in 2024.’
Pound US Dollar Exchange Rate Forecast: Hawkish Commentary to Drive Volatility?
Looking ahead, a speech from BoE policymaker Jonathon Haskell may drive GBP volatility later today. Amid the central banks increasingly hawkish stance towards interest rates, any further indication of potentially restrictive monetary policy may see the Pound rally.
Looking to the US, ‘Greenback’ movement may also be driven by commentary from Fed policymakers. A series of speeches this later today from both dovish and hawkish rate setters may spark volatile trade for the US Dollar.
The latest estimate for US GDP in the third quarter is due out on Wednesday. Analysts expect to see an increase of 5% in the second estimate, which may serve to boost Fed rate hike bets amid signs of a strengthened economy. However, a significant surge in GDP could potentially spark market volatility, seeing the ‘Greenback’ falter amid upbeat trade.