Pound US dollar (GBP/USD) exchange rate narrows amid mixed CBI data

Pound US dollar (GBP/USD) exchange rate narrows amid mixed CBI data

Article updated 15:35, 24/4/2024

The pound US dollar (GBP/USD) exchange rate is narrowing this afternoon, amid mixed data from the Confederation of British Industry (CBI).

The CBI found that despite business optimism increasing, UK factory orders are continuing to fall.

While orders are falling at a slower pace than usual, it still suggested continued weakness in the sector.

Additionally, analysis revealed that the UK’s job market was easing, which may prove worrisome for investors.

At the time of writing, GBP/USD is trading at around US$1.2437, showing little movement from the morning’s opening rates.

Original article continues below:

Pound US dollar (GBP/USD) exchange rate flounders amid light data calendar

The pound US dollar (GBP/USD) exchange rate is weakening this morning, as a lack of data releases pressures Sterling.

At the time of writing, GBP/USD is trading at around US$1.2426, a fall of roughly 0.2% from the morning’s opening rates.

Pound (GBP) slips amid lack of data

The pound (GBP) is trimming its recent gains this morning, amid a lack of impactful macroeconomic data.

In the wake of hawkish comments from Bank of England (BoE) Chief Economist Huw Pill, Sterling rallied yesterday. In a speech, Pill advocated for caution around early interest rate cuts, noting that risks were skewed to the downside.

Pill stated that:

‘We still have a reasonable way to go before I am convinced that the persistent momentum in underlying inflation has stabilised at rates consistent with achievement of the 2% inflation target on a sustainable basis.’

However, investors may be considering a divergence between the Federal Reserve and the BoE this morning.

Despite Pill’s rhetoric, the BoE is expected to cut interest rates before the Fed, which may be applying additional pressure to GBP/USD.

Although, owing to an upbeat market mood this morning, Sterling’s losses could be limited due to its increasingly risk-sensitive nature.

US dollar (USD) regains ground amid dip-buying

The US dollar (USD) is on the march this morning, amid an uptick in US Treasury bond yields. Additionally, owing to yesterday’s weakness, investors are likely engaging in dip-buying, further lifting USD exchange rates.

Disappointing private sector data rocked the ‘greenback’ yesterday, amid a surprise contraction in the US manufacturing sector.

This put USD on the backfoot amid an upbeat session, which is now being course corrected as markets return to support the currency.

Furthermore, anticipation of tomorrow’s GDP data could be further supporting the US dollar. With the economy expected to have grown over the first quarter, investors could be hedging their bets.

Elsewhere, data releases are few and far between thus far, which could be further capping the ‘greenback’ against its peers.

Pound US dollar exchange rate forecast: US GDP in focus

The primary focus for investors tomorrow is likely to be the latest US GDP data, which could have a decisive impact on the US dollar.

Markets are anticipating that the US economy grew by 2.5% in the first quarter of 2024, which may boost USD. However, its gains could be capped somewhat as this would be indicative of slowing growth on a quarterly basis.

Yet, as this would suggest robust economic activity, it may postpone existing Federal Reserve interest rate cut bets, further lifting USD.

For the pound, meanwhile, the focus may be the latest distributive trades data from the Confederation of British Industry (CBI).

As this acts as a health check for UK retail, reports of an increase to 5 may strengthen Sterling.

John Mulcahey

Contact John Mulcahey

Do Not Sell My Personal Information