Pound US Dollar (GBP/USD) exchange rate flat as UK consumer confidence ticks lower

Pound US Dollar (GBP/USD) exchange rate flat amid mixed UK economic data

The Pound US Dollar (GBP/USD) exchange rate is treading water this morning, amid mixed UK economic data.

At the time of writing, GBP/USD is trading at around US$1.2665, showing little movement to today’s opening levels.

Pound (GBP) wavers amid mixed economic data

The Pound (GBP) is trading in a muted capacity this morning, amid mixed economic data. While news that UK fuel bills will ease is providing some cushioning, a dip in consumer confidence may be weighing down Sterling.

The average dual fuel energy bill in the UK is due to fall by 12% from April, owing to a new price cap from Ofgem. This may assuage some of the existing cost of living pressures UK households are struggling with, although it still remains significantly higher than before the crisis began.

Furthermore, GfK found that consumer confidence fell further in February as consumers continued to contend with elevated inflation.

Joe Staton, Client Strategy Director for GfK, commented:

‘There’s a mixture of bad news and good news for February. The bad news is that the improvement in the Overall Index Score seen over recent months stalled slightly in February due to a fall across most measures. However, the good news is that optimism for our personal financial situation for the next 12 months has not slipped back.’

Elsewhere, the mixed market mood may be further affecting Sterling. Due to its increasingly risk-sensitive nature, the lack of clear bullish or bearish direction could be contributing to GBP’s muted trade.

US Dollar (USD) ticks up despite lack of data

The US Dollar (USD) is wavering higher this morning, despite a lack of impactful economic data. A mixed market mood is likely providing some support for the safe-haven currency.

Yesterday’s tech company driven stocks rally appears to have faded, leading to more level trading conditions. As this rally significantly weakened the ‘Greenback’ investors are likely to be buying the dip, allowing USD to further recover during today’s early trade.

However, Federal Reserve officials have maintained pushback against overeager interest rate cuts. This is likely serving to underpin the US Dollar, as investors anticipate a more hawkish stance from the Fed.

Francesco Pesole, FX Strategist at ING, commented:

‘Federal Reserve speakers have echoed the content of the FOMC minutes since those were published. Communication has been understandably cautious on the inflation outlook considering the recent higher-than-expected CPI, particularly stressing the risks of cutting too early or too fast.’

Pound US Dollar exchange rate forecast: Distributive trades data in focus

Looking ahead for the Pound, the core catalyst of movement is likely to be the latest distributive trades data.

The Confederation of British Industry (CBI) is expected to have found an improvement in retail sales during February, with the reading increasing to -47.

While this does reflect an increase in retail sales, the reading is expected to remain in a deeply negative state. Because of this, the Pound may struggle to attract much support from investors, as UK households remain pressured by the cost-of-living crisis.

For the US Dollar, data releases are few and far between at the start of next week. Because of this, the ‘Greenback’ may remain stagnant against its peers.

John Mulcahey

Contact John Mulcahey

Do Not Sell My Personal Information