Pound US dollar (GBP/USD) exchange rate muted amid lull in data releases
The pound US dollar (GBP/USD) exchange rate is trapped in a narrow range this morning amid a lack of UK and US macroeconomic data.
At the time of writing, GBP/USD is trading at around US$1.2625, virtually unchanged from this morning’s opening rate.
US dollar (USD) undermined by risk-on flows
The US dollar (USD) is trading mostly flat against its peers this morning as a lack of economic data releases coupled with an upbeat market mood have put pressure on USD exchange rates.
Sentiment appears to have improved following a meeting by Chinese President Xi Jinping and a group of Western chief executive in an effort to close the rift being China and the US.
Amid an absence of data, USD investors may look to an upcoming speech by a Federal Reserve policymaker for fresh impetus..
Fed Policymaker Christopher Waller will deliver a speech tonight where he could touch on the central bank’s outlook on monetary policy.
As he is one of the more hawkish voices within the Fed, Waller may advocate to keep interest rate higher for longer, as he did in his speech titled ‘what’s the rush?’ in February. This may lend the ‘greenback’ some support heading into tomorrow.
Pound (GBP) subdued amid lack of data
The pound (GBP) continues to trade sideways this morning as an ongoing lack of economic data have left Sterling struggling to find a clear direction this week.
The lack of data leaves GBP investors to focus their attention on Bank of England (BoE) interest rate cut bets.
Market speculation has mounted over the BoE’s outlook on monetary policy. As inflation continues on its downward trend towards the central bank’s 2% target, Sterling sentiment remains capped as markets are pricing in rate cuts sooner than previously expected.
GBP/USD exchange rate forecast: US data to infuse volatility in the US dollar?
Looking ahead, the primary driver of movement for the Pound US dollar exchange rate for the remainder of the week is likely to be an inflow of US data releases.
Tomorrow, the ‘greenback’ could face fresh selling pressure as the lates jobs data is expected to show that jobless claims rose during the week ending March 23, which may undermine US dollar sentiment.
However the US dollar’s losses could be limited as the US is set to publish its finalised GDP figures for the last quarter of 2023. If the data confirms an expansion in the US economy, the ‘greenback’ could strengthen.
Moving into Friday, the latest core PCE price index is forecast to remain unchanged, at 2.8%. As the Federal Reserve’s preferred gauge on inflation, any difference in the results could infuse volatility in USD exchange rates.
Turning to the Pound, the UK’s finalised GDP data for the fourth quarter of 2023 is forecast to confirm that the UK fell into a recession in the second half of last year, which in turn may weigh on GBP exchange rates.