Pound US Dollar (GBP/USD) exchange rate flat ahead of BoE speeches

Pound US Dollar (GBP/USD) exchange rate listless as markets await BoE speeches

The Pound US Dollar (GBP/USD) exchange rate is trading within narrow boundaries this morning, as investors await speeches from Bank of England (BoE) policymakers.

At the time of writing, GBP/USD is trading at around US$1.2623, showing minimal movement from the morning’s opening levels.

Pound (GBP) listless ahead of BoE speeches

The Pound (GBP) is enduring rangebound trade this morning, as investors await a duo of speeches from Bank of England policymakers.

Both Swati Dhingra and Catherine Mann are expected to deliver remarks this afternoon, which could inject fresh volatility. The pair represents opposing views within the Monetary Policy Committee, having voted for an interest rate cut and rate hike respectively.

As the clarity of communication from the BoE has been an issue recently, further splits could weigh on GBP. While the BoE is expected to keep interest rates unchanged for an extended period, any indications of a coming rate cut may weaken Sterling against its peers.

Elsewhere, risk appetite is likely serving to keep the Pound afloat, due to its increasingly risk-sensitive nature. While the mood is currently tentatively bullish, if geopolitical tensions continue to ratchet, Sterling may weaken.

US Dollar (USD) muted amid risk-on trade

The US Dollar (USD) is treading water this morning, as an upbeat market mood weighs the safe-haven ‘Greenback’ down.

Following the latest Chinese inflation data, markets are anticipating additional economic stimulus from the Chinese Government. Headline inflation cooled to -0.8%, down from -0.3% in January, compared to the previous year.

Kyle Rodda, Senior Financial Market Analyst at capital.com, commented:

‘Perhaps markets see the terribly low number as a potential catalyst for more muscular monetary or fiscal stimulus from the central government, which, up until this point, has been moderate in applying countercyclical policy.’

Elsewhere, USD investors are likely awaiting further impetus from this afternoon’s initial jobless claims data. Recent labour data has shown that the US jobs market remains resilient, despite aggressive interest rate hikes.

Claims are anticipated to have fallen in the week ending February 3, which could lift USD later today.

Pound US Dollar exchange rate forecast: Fed Speeches in Focus

Looking ahead for the US Dollar, the core catalyst of movement is likely to be speeches from Federal Reserve officials. Later, President of the Richmond Fed Thomas Barkin is due to speak, followed by President of the Dallas Fed Lorie Logan tomorrow evening.

If both speakers demonstrate a hawkish consensus, USD could strengthen as investors pare back existing interest rate cut bets.

For the Pound, data releases are few and far between through to the end of the week’s session. Because of this, risk appetite is likely to be the predominant driver of movement, as GBP is left exposed.

As an increasingly risk sensitive currency, a shift towards bullish trade could strengthen the Pound against the safe-haven US Dollar.

John Mulcahey

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