Pound US dollar (GBP/USD) exchange rate climbs amid risk-on mood
Article updated 16:15, 24/6/2024
The pound US dollar (GBP/USD) exchange rate is climbing higher this afternoon as an increasing appetite for risk extends into the latter part of the session.
The upbeat market sentiment knocks the safe-haven US dollar (USD), which has now fallen to a two-day low. In addition to this, US Treasury yields remain on the defensive, further souring USD sentiment.
Looking to pound (GBP), a lack of further releases throughout the afternoon saw the increasingly risk-sensitive currency firm against its safer rivals, while losing ground against its riskier rivals,
Looking ahead, could any hawkish commentary from Federal Reserve policymaker Mary Daly lend the ‘greenback’ some support this evening?
At the time of writing, GBP/USD is trading at around $1.2681, up approximately 0.3% from today’s opening rates.
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Pound US dollar (GBP/USD) exchange rate strengthens amid US data lull
The pound US dollar exchange rate is gaining ground this morning amid a lack of US data and a cautiously upbeat market sentiment.
At the time of writing the GBP/USD exchange rate is trading at around $1.2664, up approximately 0.2% from this morning’s opening rate.
Pound (GBP) subdued following lacklustre retail data
The pound (GBP) is mixed this morning following the release of the Confederation of British Industry’s (CBI) latest industrial trends orders.
The survey’s total order book balance edged higher to -18 in June, increasing from the previous month’s -25 and reaching a three-month high. While output forecasts rose to their highest level since October last year, export orders fell to their lowest level since February 2021.
Ben Jones, Lead Economist at the CBI, said:
‘It’s encouraging to see that manufacturers remain confident the economy is heading in the right direction and our June survey suggests that the recovery should broaden out over the summer
One note of caution is that order books remain soft. The sharp deterioration in export order books is particularly striking and is something to keep an eye on in the coming months.’
However, a cautiously upbeat market sentiment seems to be cushioning GBP’s downside, buoying Sterling against its safe-haven rivals.
US dollar (USD) slips amid data lull
The US dollar (USD) is facing headwinds this morning amid a lack of fresh US releases.
In addition to this, a slight pullback in US Treasury yields and a risk-averse market sentiment further stymie investor interest in the safe-haven ‘greenback’.
Elsewhere, increased projections that the Federal Reserve could begin to loosen its monetary policy in the third quarter of 2023 continue to sour USD sentiment today. Despite a continually hawkish stream of commentary from Fed policymakers, the CME FedWatch Tool is now pricing in a 59.5% chance of a September interest rate cut.
Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Shares and Stock Brokers, commented:
‘We expect the Fed to begin cutting rates by September 2024, in line with the consensus forecast.’
With an influx of Fed speeches due in the coming days, could further policymaker push back quell surmounting rate cut bets, and lift the ‘greenback’?
Pound US dollar exchange rate forecast: Fed speeches in focus
Looking ahead, a number of senior Federal Reserve rate setters are due to deliver speeches this week, with Mary Daly kicking off the stream of commentary this evening. Daly is widely regarded as a more neutral policymaker, due to her central stance towards monetary policy. However, any hawkish rhetoric later today may shock markets, with further signs of a hawkish Fed consensus likely to lift the US dollar.
Looking to the UK, a lack of immediate releases could see the riskier currency left vulnerable to global risk dynamics. An increasing appetite for risk may boost Sterling against its safer rivals, while a spell of gloomy trade could alternatively see its US counterpart take precedent.