Pound US Dollar (GBP/USD) exchange rate subdued amid lull in data

Pound US Dollar (GBP/USD) exchange rate muted as data in short supply

The Pound US Dollar (GBP/USD) exchange rate is trapped in a narrow range this morning amid an absence of market moving data.

At the time of writing, GBP/USD is trading at $1.2613, virtually unchanged from this morning’s opening rate.

Pound (GBP) rangebound amid lack of data

The Pound (GBP) is flat against the majority of its peers this morning as an absence of economic data leaves Sterling trading without a clear direction.

Amidst a lack of UK data, GBP investors may turn to the latest comments from former Bank of England (BoE) Chief Economist, Andy Haldane, regarding the UK’s ‘inflationary tiger’, and his advice to his former colleagues on loosening monetary policy.

Haldane said:

‘I think that’s where the balance of risks lies, yes. For me the case for putting in place some upfront, early insurance on the monetary policy side is strong and strengthening, and I’m fearful we leave that insurance a little too late in the year.’

His comments have in turn stoked fresh BoE interest rate cut bets as GBP investors speculate on whether an imminent rate cut is now on the cards.

US Dollar (USD) holds steady on Washingtons birthday

The US Dollar (USD) is rangebound this morning amid thin trading conditions in the currency as American markets are closed in celebration of Washington’s birthday.

Despite this, economists at ING are confident that the ‘Greenback’ will maintain a positive trajectory through the rest of the month as Friday’s PPI figures bolster inflation expectations.

Economists at ING speculate:

‘It seems the US Dollar can stay strong for the rest of this month. Seasonal factors support it, but Friday’s release of strong January US PPI data warns that the 29 February release of the core PCE inflation data – the Fed’s preferred reading – could also print a high 0.4% month-on-month and continue to thwart the disinflation trade. That would be our preferred view.’

GBP/USD exchange rate forecast: FOMC minutes to bolster US Dollar sentiment?

Looking ahead, the continued absence of data is likely to leave movement in the Pound US Dollar exchange rate sensitive to risk appetite. A cautious market mood may GBP/USD tick lower.

Later in the week the Federal Reserve will release the minutes from their latest policy meeting.

The Fed pushed back against imminent interest rate cuts in the aftermath of its latest vote. If the minutes mirror the same narrative surrounding upcoming rate cuts, the USD could rise.

Turning to the Pound, the lack of data theme remains until Thursday, when the UK releases its preliminary services and manufacturing PMIs.

Growth in both sectors is expected to have accelerated this month, which may provide a boost for the Pound.

Sarah Ebrahem

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