Pound US dollar (GBP/USD) exchange rate strikes six-week low
The pound US dollar (GBP/USD) exchange rate struck a fresh six-week low this morning, amid rising expectations of Donald Trump winning the US presidency.
At the time of writing, GBP/USD is trading at around $1.2631, virtually unchanged from this morning’s opening levels.
US dollar (USD) supported by Trump predictions
The US dollar (USD) is gaining ground against the majority of its peers this morning, buoyed by rising predictions that Donald Trump will win the US election.
Following last week’s Presidential debate, and in light of yesterday’s US supreme court decision granting Trump some immunity for trying to reverse the 2020 election, the odds of the former president returning to office have risen sharply.
Tapas Strickland at National Australia Bank commented:
‘Those two headlines, and given the reaction to President Biden’s first debate, continue to suggest a Trump presidency is looking more likely at this stage.’
USD investors hope that a pro-business Trump presidency will focus on tax cuts and be positive for the US economy.
Lending the ‘greenback’ further support this morning is a prevailing risk-off market mood.
Pound (GBP) flat amid limited data
The pound (GBP) is treading water against the majority of its peers this morning as a data-light calendar see’s Sterling struggle to find a clear trajectory.
GBP investors may also be reluctant to place any aggressive bets as we approach Thursday’s general election.
With a Labour victory heavily priced in, any surprises on Thursday could infuse significant volatility into GBP exchange rates towards the latter stages of this week.
GBP/USD exchange rate forecast: Powell speech to bolster the US dollar?
Looking ahead, the pound US dollar exchange rate could see some movement later this afternoon following a speech from Federal Reserve Chair Jerome Powell.
Powell’s comments will be closely watched by USD investors as they seek to gauge whether the US central bank will pursue an interest rate cut in September. If Powell signals he was to see more done to bring down inflation, the US dollar may plunge.
However, any upside in the US dollar may be limited with the release of the latest US JOLT job openings data.
Job openings are forecast to fall from 8.059 million to 7.91 million in May.
Following April’s dip, the US Dollar stumbled against its peers. Will another weak reading undermine USD later today?
Turning to the Pound, the only data release of note ahead of the general election will come in the form of the UK’s finalised services PMI.
Scheduled for release on Wednesday, the index is forecast to marginally dip, however, is expected to remain firmly in expansion territory (a score over 50).
With the services sector amounting to 80% of the UK’s economic output, will a positive reading lend GBP some modest support before the election?