Pound US dollar (GBP/USD) exchange rate flat amid forecast-beating US jobs data
Article updated 16:55, 18/4/2024:
The pound US dollar (GBP/USD) exchange rate is narrowing this afternoon, following better-than-expected US labour data.
The latest initial jobless claims for the week ending April 13 printed at 212,000, beneath expectations of 215,000.
As this didn’t reflect an expected rise in joblessness, it suggested that the US labour market is remaining resilient.
This, alongside hawkish remarks from Federal Reserve official Michelle Bowman are underpinning USD this afternoon.
At the time of writing, GBP/USD is trading at around US$1.2460, showing little movement from today’s opening rates.
Original article continues below:
Pound US dollar (GBP/USD) exchange rate firms amid upbeat market mood
The pound US dollar (GBP/USD) exchange rate is firming this morning, due to a tentative increase in risk appetite.
At the time of writing, GBP/USD is trading at around US$1.2476, an increase of just under 0.2% from the day’s opening levels.
Pound (GBP) listless amid lull in data releases
The pound (GBP) is largely rangebound this morning, amid a short supply of macroeconomic data releases.
This is preventing Sterling from gaining traction, despite a modestly bullish market impulse which would normally lift GBP.
Investors may be continuing to digest dovish comments from Bank of England (BoE) Governor Andrew Bailey. Yesterday, Governor Bailey suggested that April’s inflation reading would likely show a cooldown, which prompted investors to adjust their interest rate cut bets.
Yesterday, Bailey commented that inflation was ‘moving in the right direction’, paving the way for a rate cut soon.
This is likely keeping GBP under pressure today as investors re-evaluate their expectations. With markets now contemplating the likelihood of a BoE rate cut before the Federal Reserve, Sterling may struggle to gain an advantage over today’s session.
US dollar (USD) wavers amid upbeat trading conditions
The US dollar (USD) is largely static thus far this morning, amid a broadly risk-on market mood. This is serving to limit the safe-haven currency’s appeal.
Furthermore, markets are awaiting further speeches from Federal Reserve officials, alongside the latest initial jobless claims release.
President of the New York Fed John Williams is due to speak this evening, followed by President of the Atlanta Fed Raphael Bostic.
If they indicate a more hawkish demeanour, and perhaps echo Fed Michelle Bowman’s comments last night, USD could rise.
Yesterday, Bowman commented that:
‘Progress on inflation has slowed, and … maybe it is even stalled at this point. Monetary policy currently restrictive; time will tell if it is ‘sufficiently’ restrictive. Consumers are turning to cheaper goods, but still spending heavily on travel for eclipse viewing.’
Additionally, an uptick in initial jobless claims could soften the ‘greenback’ this afternoon. Claims are anticipated to have increased to 215,000 which may indicate growing slack in the US labour market.
Pound US dollar exchange rate forecast: Improving UK retail sales to lift the pound?
Looking ahead for the pound, tomorrow’s latest batch of retail sales data is likely to be the primary driver of movement.
Economists forecast that sales increased in March by 0.3%, an improvement from February’s flat 0%. This could be indicative of improving consumer spending, which may boost Sterling due to the importance of the UK’s retail sector.
Then, speeches from key Bank of England figures may drive additional volatility. BoE Deputy Governor Sarah Breeden is due to speak, alongside policymaker Dave Ramsden. If they both advocate for keeping interest rates unchanged, GBP could strengthen.
For the US dollar, impactful data releases are set to taper off towards the end of the week. This could leave the ‘greenback’ to trade without a clear direction.
However, if the market mood deteriorates, safe-haven flows could strengthen USD above riskier peers such as Sterling.