Pound US dollar (GBP/USD) exchange rate edges higher despite data-light calendar
The pound US dollar (GBP/USD) exchange rate is ticking up this morning as markets remain jittery moving into the second half of this week.
At the time of writing, GBP/USD is trading at around $1.2700, up roughly 0.2% from this morning’s opening levels.
US dollar (USD) wavers amid market jitters
The US dollar (USD) is struggling to garner investor attention this morning, dipping against the majority of its peers, as markets remain cautious to bet on the ‘greenback’.
The potential threat of wider US economic downturn, escalating geopolitical tensions in the Middle East and the upcoming US election have helped to create an ‘ominous shadow across financial markets’, says Stephen Innes, Managing Partner at SPI Asset Management.
Ines explains:
‘The US stock market wobbled and wavered on Wednesday, ultimately fizzling out as the day’s recovery hopes melted away like a popsicle in the summer sun. The potential for a broader U.S. economic slowdown, misaligned global monetary policies, and the bubbling geopolitical tensions in the Middle East cast long, ominous shadows across financial markets. Furthermore, the U.S. political election looms, potentially turning the markets into more of a chaotic mosh pit than a graceful waltz. Prepare for a potentially “Turbulent Thursday” and brace for what might become a “Frantic Friday.”’
Despite risk-off flows, the acutely safe-haven currency has remained on the back foot against the majority of its rivals during the first half of today’s European session.
Pound (GBP) undermined by civil unrest
The pound (GBP) is trapped in a narrow range against the majority of its peers this morning amid a further absence of UK economic data releases.
However, also weighing on GBP exchange rates this morning are ongoing far-right riots across the UK.
As the current riots serve to undermine the UK’s recently perceived political stability under the new Labour government, GBP remains largely muted as investors shy away from placing any aggressive bets.
Further hobbling Sterling sentiment is this morning’s market mood. As markets remain cautious, the increasing risk-sensitive pound is struggling to catch bids.
GBP/USD exchange rate forecast: US initial jobless claims to undermined USD?
Looking ahead, the primary driver of movement for the pound US dollar exchange rate this afternoon will likely be the publication of the latest initial jobless claims from the US.
Should the new unemployment claims print near a new one-year high struck last week, this could ramp up fears over the overall health of the US economy and dent the ‘greenback’ towards the second half of today’s European session.
Turning to the Pound, as UK data will remain scarce for the remainder of the week, GBP exchange rates will likely remain driven by market appetite for risk.
Should this morning’s downbeat mood prevail, GBP could close the week on the back foot.