Pound US Dollar (GBP/USD) fluctuates ahead of central bank commentary
The Pound US Dollar (GBP/USD) exchange rate is changeable this morning, as investors look to external economic projections amid a lack of central data.
At the time of writing the GBP/USD exchange rate is trading at around $1.2680, virtually unchanged from this morning’s opening rate.
Pound (GBP) wavers amid employment concerns
The Pound (GBP) is moving without a clear trajectory this morning, with fresh economic data in short supply.
In the meantime, recent labour data from Adzuna, a UK jobs search engine, could serve to sour Sterling sentiment. The data showed that new job vacancies fell below 900,000, for the first time since April 2021.
Economists speculate that the downturn in employment opportunities could be due to the UK’s high interest rate environment, as last year’s fourteen consecutive interest rate hikes seem to stifle business spending on new hires.
This will likely weigh on Bank of England (BoE) policymakers, encouraging a start to the central bank’s unwinding cycle, as the effects of a loosening labour market begin to be felt.
Andrew Hunter, Co-founder of Adzuna, said:
‘As we predicted last month, January 2024 has proven to be one of the most difficult starts to the year for job hunters in recent years with companies continuing to put hiring plans on ice.’
US Dollar (USD) buoyed by economic optimism
The US Dollar (USD) is rangebound this morning amid a lack of market moving data.
However, recently improved economic projections appear to be keeping USD afloat so far today.
According to a survey released today by the National Association for Business Economics (NABE), leading US economists have improved their economic forecasts for the year ahead.
Following inflationary adjustments, the NABE states that the US economy is set to grow to 2.2% this year, in comparison to the 1.3% growth projection provided in a survey conducted in November of last year.
Economists noted the resilience of the US labour market and household spending in recent months, despite persistently high interest rates, raising overall growth expectations for the year ahead.
Ellen Zentner NABE President, and Chief U.S. Economist at Morgan Stanley affirmed:
‘The stronger February growth forecasts for 2024 result from upward revisions to key sectors of the economy, including personal consumption expenditures, non-residential fixed investment, residential investment, and government consumption expenditures and gross investment.’
However, with 41% of survey respondents citing high interest rates as the most significant risk to potential economic weakness, the Federal Reserve could face renewed pressures to reassess monetary policy as the session continues.
Pound US Dollar exchange rate forecast: central bank commentary to drive GBP/USD movement?
Coming up, a speech from BoE Chief Economist Huw Pill later this morning will likely attract investor interest. Should Pill continue to push back against monetary loosening, GBP could strengthen with the lingering prospect of prolonged rate holds throughout 2024.
Looking to the US, the latest durable goods orders in January’s month-on-month report are due to report a significant contraction to -4.8% on Tuesday. A negative reading may serve to dent the ‘Greenback’ amid signs of decreased economic output.
A speech from Fed Michael S Barr on Tuesday afternoon may then drive additional USD volatility. Amid waning Fed rate cut expectations, any hawkish guidance could further boost market expectations of delayed rate cuts.